Netflix shares rise 7% in after-hours trade as streaming giant adds to huge subscriber base

The Netflix earnings were posted after the the US S&P 500 stocks index closed at a new record high for the third day in a row 

Wrestler Carmella leaps at Bianca Belair, during the World Wrestling Entertainment's
Raw event in Boston. WWE's weekly television show 'Raw' will move to Netflix in a $5bn deal.

Netflix shares rose as much as 7% in after-hours trade late on Tuesday after the streaming giant blew past analysts' subscriber estimates in the fourth quarter, driven by a strong slate of shows. 

The company reported it added 13.1m subscribers in the the three months to the end of December, its largest fourth-quarter subscriber growth ever, handily exceeding projected gains of 8.97m. 

That brings the total number of subscribers to 260m. 

Revenue rose to $8.8bn (€8.1bn), which also topped forecasts and the company's own guidance. 

The Netflix earnings were posted after the the US S&P 500 stocks index closed at its third consecutive record high. 

The streaming giant said it expects healthy double-digit revenue growth for full-year 2024, as it continues to add members and invest in its advertising business. 

Netflix said advertising is not yet a primary driver of revenue growth, but it aims for that to change by 2025.

"It is becoming increasingly clear that Netflix has won the streaming wars," said Bank of America media analyst Jessica Reif Ehrlich.

Antenna Research found that Netflix has the lowest monthly churn rate among streaming services, with just 2% of subscribers cancelling in the month of December.

The company credited gains to the strength of its intellectual property, including Squid Game: The Challenge, a reality show based on its most-watched TV series, new original series, such as All the Light We Cannot See, feature films like Zack Snyder's Rebel Moon: A Child of Fire, and non-English-language programming, including the third season of Lupin from France. 

"Looking ahead, despite last year's strikes pushing back the launch of some titles, we have a big-bold slate for 2024," the company said.

Its crackdown on password sharing will likely fuel the growth of Netflix's advertising-supported tier, said Ms Ehrlich. 

She said Netflix also is a beneficiary of changing market dynamics. 

Earlier in the day, Netflix and TKO announced a more than $5bn deal to bring World Wrestling Entertainment's Raw and some other programming exclusively on the streaming service.

That deal is seen in the US as a big deal. 

It involves Netflix taking a big step into live events with a more than $5bn rights deal that would make it the exclusive home of World Wrestling Entertainment's Raw from January 2025.

The 10-year partnership will put Raw on the streaming platform in the US, Canada, Britain, and Latin America, among other territories, the companies said. 

The streaming pioneer has an option to extend the deal for another 10 years or to opt out after the initial five years.

Netflix began experimenting with live events last year, with comedian Chris Rock's stand-up special. 

It also has found success with sports-related programming, such as its Formula 1 racing documentary series, Drive to Survive, and the behind-the-scenes golf documentary series, Full Swing. 

The Raw deal marks Netflix's first long-term bet on live events that appeal to a loyal, multi-generational base of fans who turn to WWE each week for bouts. 

Unlike other professional sports, the competition is year-round and not seasonal. 

• Reuters