Subscriber growth is back on the menu at Netflix (NASDAQ:NFLX). Boosted by its efforts to crackdown on password-sharing and its ad-supported tier drawing in new members, the streaming giant’s Q3 report had plenty of positives for investors to digest.
The company saw 8.76 million global paid subscribers come on board during the quarter, beating consensus expectations for 6.2 million, with total subs reaching 247.15 million compared to the Street’s forecast of 244.41 million. That amounted to year-over-year growth of 10.8%, an acceleration on Q2’s 8% increase and the 4.9% rise notched in Q1.
Netflix guided for the same kind of subscriber growth in Q4 +/- a “few million,” suggesting between 7 to 11 million new adds, at the midpoint above the 7 million consensus had in mind.
The total revenue haul in the quarter reached $8.54 billion, amounting to a 7.7% increase on the same period a year ago whilst meeting analyst expectations. On the bottom-line, Netflix outperformed, delivering EPS of $3.73, 23 cents above the consensus estimate.
At the same time, the company is implementing price hikes in the US, UK, and France. Domestically, the Ad-supported plan will stay at $6.99 per month, and the Standard plan will remain at $15.49 per month, whereas the Basic plan will see an increase to $11.99 per month (from $9.99), and the Premium plan will rise to $22.99 per month (from $19.99).
Netflix attributed its impressive performance to several factors, including the introduction of paid sharing, a robust and consistent content lineup, and the continuous expansion of its streaming service worldwide.
That is a sentiment echoed by Pivotal analyst Jeffrey Wlodarczak, who thinks the results prove who remains the boss in streaming.
“NFLX reported materially higher than forecast 3Q subscriber results and 4Q guidance as the company is demonstrating a great start on piracy monetization that we believe can be a subscriber growth engine through most of ’24 (even in a potential choppy economic climate),” Wlodarczak said. “While delivering nicely stronger than expected subscriber growth (the key to the NFLX flywheel) the company is also clearly demonstrating its scale highlighted by continuing expanding operating margins and $6.5B in ’23 free cash flow and guidance for continued expanding operating margins in ’24. NFLX is clearly dominating the global streaming market that we do not believe is properly reflected in its current market valuation.”
All told, Wlodarczak rates NFLX a Buy and gives the stock a Street-high $600 price target, implying shares have room for 73% in the year ahead. (To watch Wlodarczak’s track record, click here)
Elsewhere on the Street, the stock garners an additional 18 Buys, 14 Holds and 1 Sell, for a Moderate Buy consensus rating. The average target currently stands at $457.70, representing one-year upside of ~15%. (See NFLX stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
