Shares of Netflix hit an all-time high on Friday, boosted by investors’ optimism that its strong content lineup will help the streaming giant maintain buoyant subscriber growth, even as its password-sharing crackdown prompts.
The company’s stock, widely seen as the winner of Hollywood’s streaming wars, rose 11% to a record high of $763.89, adding more than $28 billion to its roughly $295 billion market value.
This is at the top of estimates More than 1 million customers added on quarterly basis and projected sequentially higher sign-ups for the last three months of the year on the return of South Korean drama “Squid Game.”
The company’s profit and revenue also beat estimates, which some analysts believe is a positive sign for efforts to shift investors’ focus away from customer growth. The inevitable slowdown in sign-ups after its success Restrict password-sharing,
The 5.1 million users added by Netflix in the third quarter were down from 8.76 million in the year-ago period.
“The third quarter saw a slowdown in subscriber growth that we were expecting, but Netflix also has opportunities in other areas to enhance its financial performance,” said Morningstar analyst Matthew Dolgin.
Part of the pressure includes price increases. After raising fees in Japan, the Middle East and Africa as well as parts of Europe in recent weeks, Netflix is raising prices in Italy and Spain, and some analysts expect a similar move in the US next year. .
“Netflix has not announced any price changes, although (it) has indicated there is room for price increases with strong engagement,” Bernstein analysts said.
The ad-supported tier also showed signs of progress as it accounted for more than 50% of sign-ups in countries where it was available in the third quarter, although Netflix does not expect advertising to become the primary growth driver until 2026.
At least 20 analysts raised their price targets on the stock after the results, raising the average target from $706.38 to $760, according to data compiled by LSEG.
Netflix shares were trading at 30.40 times forward 12-month profit estimates, compared with 18.50 times for Walt Disney and 9.65 times for Comcast.
Netflix shares have surged nearly 57% so far this year, Disney’s shares have gained 8%, while Warner Bros. Discovery has fallen nearly 31%.
Netflix is betting on a strong line-up that includes the new “Knives Out” movie, the latest season of “Stranger Things” and live events. Two National Football League games on Christmas Day To attract customers.
“Peers in the legacy media sector are losing money hand-in-hand, which means Netflix can increase its profits in content creation while others can’t afford to allocate as much capital,” said Matt Britzman, senior equity analyst at Hargreaves Lansdowne. “
