Netflix Surges 16% as Q3 Earnings Impress Investors and Subscriber Base Soars
Streaming behemoth Netflix has witnessed a remarkable 16% surge in its stock following a robust Q3 earnings report, which showcased a staggering 70% increase in its newly-introduced ad-supported subscription tier. The company added a remarkable 8.76 million subscribers during the third quarter, surpassing Wall Street’s estimated figure of 5.49 million. This surge in subscribers marks the largest increase since the second quarter of 2020, largely driven by stay-at-home restrictions resulting from the pandemic.
After experiencing a net loss of subscribers in April 2022, Netflix’s resurgence in growth has fuelled optimism among analysts regarding its future prospects. Market heavyweight Morgan Stanley has upgraded the stock to overweight status, while Truist analyst Matthew Thornton anticipates continued subscriber growth due to measures implemented to counter password-sharing activities.
The quarterly earnings report unveiled several breakthroughs for Netflix, primarily the massive increase in its subscriber base. Adding 8.76 million subscribers during Q3, the company surpassed the anticipated figure projected by Wall Street. This substantial surge in subscribers, the largest since Q2 2020, demonstrates a commendable growth trajectory for the streaming giant. Analysts are incredibly positive about Netflix’s ability to consistently attract and retain subscribers, with Truist analyst Matthew Thornton foreseeing ongoing growth stemming from tightened controls on password-sharing activities.
The positive outlook surrounding Netflix’s future growth potential has led to an upgrade of the company’s stock rating by multiple analysts, accompanied by revisions to price targets. Morgan Stanley’s upgraded rating and increased price target reflect their confidence in Netflix’s ability to accelerate revenue growth and expand margins. Similarly, Truist analyst Matthew Thornton has also upgraded Netflix to a buy rating and raised the price target, citing additional benefits from curbing password-sharing practices as well as the impact of advertising and video games. With hit shows like Squid Game, Wednesday, and Stranger Things in its content arsenal, Netflix possesses a robust lineup that can drive further growth. Furthermore, the company has additional growth levers at its disposal, further bolstering its attractiveness as an investment option.
In conclusion, Netflix’s impressive Q3 earnings report has delighted investors and propelled its stock to surge by 16%. The company’s notable achievements include a considerable increase in its subscriber base and a substantial rise in its newly-introduced ad-supported subscription tier. With promising growth prospects, bolstered by password-sharing crackdowns and a strong content lineup, Netflix is poised to build upon its recent success and continue its ascent in the streaming industry.
