Netflix Earnings: Stock Rises After Beating Expectations—Despite Slower Subscriber Growth

Netflix exceeded Wall Street’s expectations for both earnings and revenue, adding 35 million paid subscribers year-over-year. This strong performance pushed the company’s stock up in after-hours trading, despite a noticeable slowdown in subscriber growth.

Key Facts

• Netflix reported earnings of $5.40 per share and revenue of $9.82 billion for the third quarter of 2024, surpassing analyst estimates of $5.12 earnings per share and $9.77 billion in revenue, according to FactSet.
• The company saw a 14% increase in global subscribers, reaching 282 million, compared to 247 million during the same period last year. However, subscriber growth has slowed, with Netflix adding just over 5 million new paid members this quarter, down from 8 million in the second quarter of 2024 and 8.76 million in the third quarter of 2023.
• Revenue grew by more than 15%, up from $8.5 billion in the same quarter last year.
• Netflix’s stock reached a record high of $736 last Friday, following several months of subscriber growth, largely attributed to the introduction of a lower-priced ad-supported tier and a crackdown on password sharing.
• Shares continued to climb in after-hours trading after the earnings report.

Key Background
Analysts have predicted that price hikes will sustain Netflix’s revenue growth, even as subscriber growth from its password-sharing crackdown begins to taper off. Netflix’s last significant price increase in the U.S. came in October 2023, when the “Basic” plan was raised to $11.99 per month and the “Premium” plan to $22.99. In the third quarter, Netflix’s original content, including titles like Emily in Paris Season 4, The Perfect Couple, and the first part of Cobra Kai Season 6, continued to drive viewer engagement, according to a UBS analyst report.

What To Watch For
The expansion of high-profile sports content, such as NFL games on Christmas Day and the much-anticipated Mike Tyson versus Jake Paul fight, is expected to increase engagement and attract more ad-tier subscribers in the fourth quarter, according to J.P. Morgan analysts.

How Does Netflix Compare To Other Streaming Services?
Netflix remains the leader in the “streaming wars” after bouncing back from a difficult 2022, when it posted its first quarterly subscriber loss since 2011. The so-called “Great Netflix Correction” involved stricter password-sharing policies, the introduction of an ad-supported tier, and expansions on popular franchises like Bridgerton, Squid Game, and Stranger Things. According to Nielsen data, Netflix’s share of U.S. viewership increased from 7.9% to 8.2% over the last quarter, outperforming its competitors. Streaming rival Disney, for instance, only posted its first profit in May after years of losses.

Forbes Valuation
Netflix cofounder and executive chairman Reed Hastings, who ranks No. 319 on this year’s Forbes 400 list of richest Americans, has an estimated net worth of $4.3 billion. Much of his wealth is tied to his Netflix holdings. Hastings, who stepped down as co-CEO last year, has since reduced his stake in the company by more than 50%, gifting half his shares earlier this year and selling stock options regularly. He now owns less than 1% of Netflix.