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Investors are closely monitoring potential price increases for Netflix as the streaming giant continues to exceed earnings and subscriber growth expectations. The company’s stock soared by more than 8% after it surpassed third-quarter EPS and revenue estimates, as well as its fourth-quarter sales projections that beat Wall Street’s forecasts.
Netflix reported a 15% rise in revenue compared to the same period last year, surpassing the $9.78 billion consensus estimate. The streaming platform’s revenue for the third quarter came in at $9.83 billion, fueled in part by previous price hikes on specific subscription plans. Netflix also continued to implement revenue-driving initiatives such as cracking down on password sharing and introducing an ad-supported tier.
Looking ahead, Netflix forecasted revenue of $10.13 billion for the fourth quarter, surpassing the consensus estimate of $10.01 billion. For the full year of 2025, the company expects revenue to fall between $43 billion and $44 billion, outstripping the consensus estimate of $43.4 billion. This would represent an 11% to 13% increase from Netflix’s anticipated 2024 revenue guidance of $38.9 billion.
Operating margins for the full year are projected to reach 27%, up from the previous 26%, following a nearly 30% bump in the third quarter. The company also reported diluted earnings per share (EPS) of $5.40 for the quarter, significantly surpassing the consensus expectation of $5.16 and the $3.73 EPS reported in the previous year. Netflix expects fourth-quarter EPS of $4.23, higher than the consensus estimate of $3.90.
Subscriber growth also exceeded expectations, with an additional 5 million subscribers joining the platform during the quarter, driven by hit shows like “The Perfect Couple” and “Nobody Wants This.” This growth followed a net addition of 8.05 million subscribers in the second quarter, bringing the total for the third quarter to 5.07 million. The company also acquired 8.8 million paying subscribers in the third quarter of 2023.
Netflix anticipates that paid net additions will increase in the fourth quarter compared to the third quarter of 2024, citing a strong content lineup and seasonal trends. Upcoming releases such as “Squid Game” Season 2, the Jake Paul vs. Mike Tyson fight, and two NFL games on Christmas Day are expected to drive subscriber growth.
Investors have praised Netflix’s foray into live events and sports, as well as the expansion of its ad tier, which accounted for over 50% of sign-ups in countries where it was available during the third quarter. The company stated in its earnings release that it is committed to growing its advertising business and enhancing offerings for advertisers. Ad membership saw a 35% increase quarter-over-quarter, with plans to launch the ad tech platform in Canada in Q4 and more broadly in 2025.
Overall, Netflix’s strong performance in earnings and subscriber growth has positioned the company well for future growth and expansion. With a robust content slate and ongoing revenue initiatives, the streaming giant continues to attract new subscribers and drive revenue growth, making it an attractive investment for investors looking to capitalize on the booming streaming industry.
