- Netflix (NDAQ:NFLX) capped off Q3 2023 by beating earnings estimates and reporting its highest quarterly subscriber growth since Q2 2020, which sent the stock soaring
- Q3 earnings rose to US$3.73 per share, beating Wall Street’s expectations of around US$3.56, sending the stock up by as much as 13 per cent in extended Wednesday trading
- The company added 8.76 million subscribers in the quarter, raising its overall subscriber base to 247.2 million
- Netflix stock (NDAQ:NFLX) opened Thursday with a gain of 15.54 per cent trading at US$400 per share
Netflix (NDAQ:NFLX) capped off Q3 2023 by beating earnings estimates and reporting its highest quarterly subscriber growth since Q2 2020, which sent the stock soaring.
The company added 8.76 million subscribers in the quarter, well ahead of Wall Street’s 6 million forecast, raising its overall subscriber base to 247.2 million. Europe, the Middle East and Africa represented most of Q3 growth with almost 4 million customers onboarded in the region, increasing total customers residing outside the United States to over 70 per cent.
While streaming competitors Walt Disney, Warner Bros Discovery and Paramount Global have been slashing costs and laying off staff to keep shareholders happy, Netflix’s Q3 earnings rose to US$3.73 per share, beating Wall Street’s expectations of around US$3.56, while revenue grew by 7.8 per cent to US$8.54 billion, just ahead of forecasts.
NFLX shares reacted to the results by adding as much as 13 per cent in extended Wednesday trading. The stock is up by more than 27 per cent over the past year, slightly ahead of the Nasdaq Composite’s 24.66 per cent return.
Management believes the strong quarterly performance is because of its robust programming lineup, as well as its efforts to minimize password sharing through the introduction of paid sharing, where users can purchase additional access for others on their accounts. This clear example of customer loyalty and pricing power has led the company to hike prices in three major markets.
Starting Oct. 18, Netflix increased the U.S. premium ad-free plan by US$3 to US$23 and the basic plan by US$2 to US$12. Similar measures are now in effect in the U.K. and France, with the premium plan rising by 2 pounds to 17.99 pounds and by 2 euros to 19.99 euros, respectively.
Canadians last endured a subscription price hike in Q1 2022, when they saw the standard plan rise by C$1.50 to C$16.49 per month, and the premium package go up C$2 to C$20.99 per month. Netflix also recently removed the basic plan option for new subscribers, leaving an C$11 gap between the C$5.99 add-supported plan and the C$16.99 standard plan.
Netflix is on pace to add more than 20 million subscribers in 2023, which would more than double the figure for 2022. The company is forecasting Q4 revenue of US$8.69 billion and earnings of US$2.15 a share, both just below Wall Street estimates, with similar subscriber growth to Q3 as it remains focused on developing its vast content library.
The company expects to spend US$13 billion on content in 2023, down from US$17 billion because of the writer strike and ongoing actor strike, while generating US$6.5 billion in free cash flow, up from its previous estimate of US$5 billion.
Netflix is a leading TV, film and gaming streaming service with over 247 million paid subscribers in more than 190 countries.
Netflix stock (NDAQ:NFLX) last traded at US$346.19 per share at Wednesday’s market close. It opened Thursday with a gain of 15.54 per cent trading at US$400 per share.
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