Streaming pioneer Netflix (NASDAQ: NFLX) has had a remarkable turnaround.
Back in the first quarter of 2022, Netflix stock plummeted to levels as low as $174 following a loss in subscriber count and a widely unpopular password-sharing crackdown.
However, ever since then, NFLX stock has been in a strong uptrend — despite introducing an ad-supported tier and increasing prices. That uptrend is set to continue — the company’s Q4 2024 earnings call on January 1, 2025, was a standout success.
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Investors reacted enthusiastically to the news. On the day of the earnings report, Netflix shares opened at $860.41 — by press time, they had surged by 14.24% to reach a price of $982.99.
In general, such a strong move to the upside from such an established, large business is a rare sight. Let’s take a closer look at exactly what it is that merited such a vote of confidence from the markets.
Netflix stock skyrockets on strong quarterly results
For the quarter ended December 31, 2024, Netflix provided earnings per share (EPS) of $4.27 — beating consensus analysis estimates by $7. The figure represents a sizable 102.36% increase on a year-over-year (YoY) basis. In addition, this marks the fourth consecutive quarter in which the business has provided an earnings beat.
Revenues came in at $10.25 billion — ahead of analyst forecasts which predicted $10.13 billion. Perhaps most impressively, Netflix also managed to add 19 million new subscribers during Q4 2024 — bringing the total count up to 302 million.
Ad revenue has been one of the company’s primary growth drivers — and a key reason why Wall Street is bullish on Netflix stock. In Q4, roughly 55% of new users opted for the ad-supported tier. On a YoY basis, Netflix has almost doubled its ad revenue — and it expects to do so again in 2025, per co-chief executive officer (CEO) Gregory Peters.
In addition, management increased revenue guidance for 2025 by $0.5 billion — despite the strengthening of the dollar. The plan already seems to be in motion — on the day of the earnings call, Netflix also announced another price hike. Depending on which plan subscribers opt for, their monthly Netflix bill will go up by $1 to $2.50 — and the price of adding an additional member to an account is also being increased.
At a forward price-to-earnings (PE) ratio of 36.57, NFLX stock isn’t exactly cheap. With that said, it’s on a strong upward trajectory — and with returning seasons from some of the platform’s best-performing shows such as Squid Game, Wednesday, and Stranger Things, the outlook certainly looks promising.
Featured image via Shutterstock
