Netflix shares hit record high amid robust subscriber growth

Shares in the streaming giant rose nearly 10% and are set to add more than $28bn (€25.8bn) to Netflix's market value of about $295bn

Fri, 18 Oct, 2024 - 15:53

Shares in streaming giant Netflix hit an all-time high on Friday, buoyed by investor optimism that its robust content lineup will help it maintain upbeat subscriber growth even as the boost from its password-sharing crackdown wanes.

The company, widely seen as the winner of Hollywood’s streaming wars, saw its stock rise nearly 10% and was set to add more than $28bn (€25.8bn) to its market value of about $295bn, if gains hold.

It topped estimates for quarterly subscriber additions by more than one million and projected higher sign-ups sequentially for the last three months of the year when South Korean drama Squid Game returns.

The company’s profit and revenue also beat estimates, a positive sign for its efforts to shift investor focus away from subscriber growth amid what some analysts see as an inevitable slowdown in sign-ups after the success of its password-sharing curbs.

The 5.1m users Netflix added in the third quarter were below the 8.76m additions in the year-ago period.

Part of the push includes price increases. After increasing fees in Japan, the Middle East, and Africa as well as parts of Europe in recent weeks, Netflix is hiking prices in Italy and Spain, and some analysts expect a similar move in the US next year.

The ad-supported tier also showed signs of progress as it accounted for more than 50% of sign-ups in countries where it was available in the third quarter, though Netflix does not expect advertising to become a primary growth driver until 2026.

At least 20 analysts raised their price targets on the stock following results, bringing the median target to $760 from $706.38, according to data compiled by LSEG.

Netflix’s shares were trading at 30.40 times 12-month forward profit estimates, compared with 18.50 for Walt Disney and Comcast’s 9.65.

So far this year, Netflix’s stock has risen about 41.2%, Disney is up 6.9%, while Warner Bros Discovery has shed about 31%.

Netflix is betting on a strong line-up including the new Knives Out movie, the latest season of Stranger Things and live events including two American Football games on Christmas Day to draw subscribers.