Netflix Beats Expectations for Profit and User Growth, Stock Surges as Streaming Giant Raises Prices

Netflix announced better-than-expected profit and user growth during the third quarter, leading to a surge in its stock price. The streaming giant implemented a price increase and rolled out anti-password sharing initiatives and an ad tier last year to address subscriber losses. Netflix reported $8.54 billion in revenue for the three-month period ending September 30, along with earnings per share of $3.73. These figures exceeded consensus analyst estimates of $8.54 billion and $3.49, respectively, according to FactSet.

The company also saw strong growth in paid subscribers, adding nine million net paid subscribers during the quarter. This surpassed market estimates of 6.08 million, bringing Netflix’s global paid subscriber base to 247.2 million. Following the release of the earnings report, Netflix’s stock price jumped over 10% to over $380 per share, recovering from a 3% drop during regular trading on Wednesday.

As part of its earnings announcement, Netflix revealed that it will be raising prices for its basic and premium non-ad tiers. The cost of the basic tier will increase from $9.99 to $11.99, while the premium tier will go from $19.99 to $22.99.

Netflix’s stock has experienced significant volatility over the past three years. During the early stages of the pandemic, the company’s share price more than doubled as stay-at-home orders drove increased demand for streaming services. However, in the first half of 2022, the stock crashed by about 75% as Netflix reported its first quarters of subscriber losses in a decade. The company has since regained momentum, with subscriber growth continuing due to initiatives such as cracking down on password sharing and introducing a cheaper tier with ads.

Despite recent fluctuations, Netflix’s stock remains up over 20% for the year. The company’s market capitalization currently stands at around $153 billion, just below rival Disney’s valuation of $155 billion. Netflix’s market cap peaked at over $300 billion in late 2021.

Analysts have noted that Netflix is increasingly resembling a utility in many markets, with its long-lasting and widely-used service. However, as a more mature company, Netflix faces the challenge of sustaining growth despite its already massive subscriber base. The company must continue to find innovative ways to attract and retain customers to maintain its position in the streaming industry.