Netflix Shares Soar to New Highs as Subscriber Growth Surprises Once Again – One America News Network
By Harshita Mary Varghese
January 22, 2025 – 7:31 AM PST
Advertisement
(Reuters) – Netflix (NFLX.O) saw its stock price jump 13% to reach an all-time high on Wednesday after the streaming powerhouse’s significant investment in sports brought in a record 18.9 million new subscribers during the holiday season, further extending its lead over the competition.
On Tuesday, the company also announced price increases in various regions including the U.S., aiming to enhance revenue as it shifts its focus from just increasing subscribers to other performance indicators such as sales.
“We initially thought it was a mistake. Netflix has once again surpassed expectations with subscriber growth that exceeds even the most optimistic forecasts,” remarked Bernstein analyst Laurent Yoon.
Netflix’s global subscriber count has now surpassed 300 million, giving the company a dominant position in the streaming landscape and better negotiating power with advertisers as it aims to expand its ad-supported offerings.
With a current market capitalization around $370 billion, Netflix’s value now eclipses the combined worth of competitors Disney, Comcast, Paramount, and Warner Bros Discovery and could increase by over $50 billion if these gains are maintained.
The stock reached a peak of $988 during early trading on Wednesday, creating speculation about a potential stock split.
Last year, the stock increased more than 80%, fueled by Netflix’s foray into live sports, which featured events like the boxing match between Jake Paul and Mike Tyson, alongside popular NFL games on Christmas Day that included a halftime show by pop icon Beyonce.
The Tyson-Paul match became the most-watched sporting event in the platform’s history, accounting for the highest subscriber sign-ups for any event recorded since Antenna began tracking in 2019. The quarter also witnessed the successful return of fan-favorite shows such as the second season of “Squid Game” and the hit film “Carry-On.”
“Acquiring sports broadcasting rights can be highly costly, so Netflix’s strategy of focusing on special events makes sense. These events are particularly attractive for advertisers eager to engage a wide audience,” noted Dan Coatsworth, an analyst at AJ Bell.
Coatsworth and several other market analysts predict that Netflix will inevitably pursue additional major sports rights, having already secured U.S. broadcast rights for the 2027 and 2031 FIFA Women’s World Cups.
NARROW REVENUE BEAT
Despite the impressive subscriber growth, a slight issue emerged: the increase in subscribers did not lead to a proportional rise in revenue. Sales climbed by 16%, just exceeding estimates by about $100 million, while subscriber numbers doubled the expected figures.
This narrow beat might result from the growth in subscribers from regions with lower average revenue per user (ARPU) and the high volume of sign-ups for the ad-supported plan, according to Ben Barringer, a technology analyst at Quilter Cheviot.
Nevertheless, he noted that the recent and forthcoming price hikes throughout 2025 should enhance sales figures.
This year, Netflix is anticipated to launch new seasons of hit series like “Stranger Things” and “Wednesday,” having already commenced streaming “WWE RAW.”
At least 24 analysts have raised their price targets for the stock, resulting in a median target of $1,025, as per LSEG data. The stock’s 12-month forward price-to-earnings ratio stands at 35.43, compared to Walt Disney’s 19.19.
Reporting by Joel Jose and Harshita Mary Varghese in Bengaluru; Lucy Raitano in London; Editing by Amanda Cooper and Shinjini Ganguli
Advertisements below
