Why is Netflix's subscriber growth so impressive in the fourth quarter?

Netflix added 18.9 million new paid subscribers in the fourth quarter of 2024, setting a new company record and almost double the market expectation of 9.8 million. At the same time, compared with the 13 million new people added in the same period in 2023 and the 5 million new people in the third quarter of 2024, the increase is even more alarming.

This is mainly due to its strong original content lineup and strategies, such as the second season of the popular Korean drama "Squid Games" and the live broadcast of the boxing match between Jake Paul and Mike Tyson. These high-profile programs have attracted a large number of new subscribers and increased the stickiness of existing users. In addition, weakening competition in the streaming market is also a key factor in user growth, as some rivals reduce content investment or withdraw from the market, making Netflix more attractive.

From the data point of view, Netflix is still the global leader in streaming audio and video, showing unexpected appeal and market integration capabilities.

Are Netflix's financial performance and future prospects better than market expectations?

Netflix's financial data for the fourth quarter is equally impressive:

• Earnings per share (EPS):$4.27, higher than market expectations of $4.21.
• Revenue: $10.25 billion, slightly higher than analysts 'estimates of $10.1 billion.

Looking forward to 2025, Netflix expects full-year revenue to be between US$43.5 billion and US$44.5 billion, with the median exceeding the market consensus forecast of US$43.65 billion. These data show the resilience of its business growth and management's confidence in the future.

In a letter to shareholders, the company's management emphasized: "Our content performance in the fourth quarter exceeded expectations. We remain in a leading position in user engagement, revenue and profits, and will continue to be committed to improving all aspects of our services."

What impact will the price increase have on Netflix and its users?

Netflix has announced increases in subscription prices in the United States, Canada, Portugal and Argentina. The specific increases have not yet been disclosed. But this suggests the company will increase subscription prices to further boost revenue as part of its long-term growth strategy.

Past experience has shown that price increases may lead to user loss in the short term, but due to Netflix's absolute advantage in content quality, especially in high-profile original programs and exclusive live broadcasts, the Retention rate of loyal users is still high.

For investors, such a strategy will directly enhance the company's profits and may bring more returns to shareholders.

Will the repurchase plan and stock price performance further boost market confidence?

Netflix's board of directors has approved an additional $15 billion share repurchase plan, further boosting investor confidence. This shows that the company has sufficient cash flow and plans to return more funds to shareholders. At the same time, the company's share price rose more than 13% in after-hours trading after the earnings report, with a cumulative increase of nearly 80% over the past 12 months.