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Investors around the world are buzzing with excitement as Netflix continues to impress with its outstanding financial performance in the third quarter. With the streaming giant surpassing earnings and subscriber growth estimates, many investors are considering potential price increases in the stock.
On Friday, Netflix stock skyrocketed by over 8% after the company reported impressive third-quarter results. The company’s revenue for the quarter was $9.83 billion, a 15% increase from the same period last year. This exceeded the consensus estimate of $9.78 billion from Bloomberg. In addition to the revenue growth, Netflix also raised prices on specific subscription plans last year and implemented revenue initiatives such as restricting password-sharing and introducing an ad-supported tier to drive further growth.
Looking ahead to the fourth quarter, Netflix anticipates revenue of $10.13 billion, surpassing the consensus estimate of $10.01 billion. The company also shared its revenue projections for the full year of 2025, expecting it to be between $43 billion and $44 billion compared to the consensus estimate of $43.4 billion. This forecast indicates an 11% to 13% increase from the anticipated 2024 revenue guidance of $38.9 billion.
Netflix is also optimistic about its operating margins, expecting them to reach 27% for the full year, up from the previous 26%. The company reported diluted earnings per share (EPS) of $5.40 for the quarter, significantly higher than the consensus expectation of $5.16 and the $3.73 EPS reported the previous year. For the fourth quarter, Netflix expects earnings per share of $4.23, surpassing the consensus estimate of $3.90.
Along with its financial performance, Netflix saw a significant increase in subscriptions during the third quarter. The addition of 5 million subscribers, driven by popular shows like “The Perfect Couple” and “Nobody Wants This,” surpassed expectations. This follows the 8.05 million net additions in the second quarter, showing strong growth momentum for the company.
Looking ahead, Netflix is confident that paid net additions in the fourth quarter will be even higher than in the third quarter of 2024 due to a robust content slate and typical seasonality. The company highlighted upcoming releases like “Squid Game” Season 2, the Jake Paul vs. Mike Tyson fight, and two NFL games on Christmas Day as potential drivers of subscriber growth.
Investors have praised Netflix’s expansion into live events and sports, as well as the continued growth of its ad tier. In the countries where the ad tier is available, it accounted for more than 50% of sign-ups in the third quarter. The company is committed to expanding its advertising business and improving offerings for advertisers, with plans to launch its ad tech platform in Canada in the fourth quarter and expand it further in 2025.
Overall, Netflix’s strong performance in the third quarter has generated excitement among investors, with many considering potential price increases for the stock. The company’s impressive revenue growth, subscriber additions, and future growth prospects have positioned it as a leader in the streaming industry. Investors will be closely watching Netflix’s future earnings reports and strategic initiatives to see how the company continues to drive growth and value for shareholders.
