Thematic Spotlight: Netflix Shows Off with Stellar Earnings

Last Thursday, Netflix Inc. stunned Wall Street with its third-quarter earnings report after it surpassed expectations on nearly every major metric and added more subscribers than expected. The results sent Netflix shares soaring to a record high, closing up 11% at $763.89 in New York on Friday and marking the biggest gain for the stock in over a year.1

For Q3 2024, Netflix reported $9.83 billion in revenue, marking a 15% growth YoY. The company’s earnings also increased to US$5.40 per share, roughly 6% higher than analyst expectations.2 However, perhaps most importantly, Netflix saw 5 million new subscribers last quarter, which was almost 500,000 more than what the market had forecast.3 Analysts attribute the surprising subscription beat as likely aided by strategic moves like its crackdown on password sharing and the introduction of a more affordable, ad-supported subscription tier.

Netflix has been one of the strongest performing stocks over the past two years. The stock has more than quadrupled since May 2022, when a slowdown in subscriber growth saw company shares tumble 51% in a historic sell off.4 Since then, Netflix has added more than 60 million subscribers and as of last quarter, the company now supports more than 280 million subscribers in total.5

Despite delays in production caused by last year’s Hollywood labour stoppages, Netflix has continued to deliver several high-profile hits in the third quarter. These including Korean cooking show ‘Culinary Class Wars’, and a new season of ‘Emily in Paris’ both of which were well received.6 On the film front, ‘Rebel Ridge’ and ‘The Union’ also saw good viewership numbers.7 Netflix expressed particular optimism about its upcoming content for Q4 which will include the highly anticipated return of ‘Squid Games’, its most-watched series of all time.

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