One thing Netflix definitely has learned over its many years in show business is how to go out on a high note.
The streaming giant added a record 18.9 million new subscribers during the fourth quarter. That was nearly double the number Wall Street expected and even well above the 15.8 million added to the company’s rolls in early 2020, when the onset of Covid locked the masses at home in front of their TV screens. It is also the last time Netflix says it will disclose its subscriber numbers — at least as part of its regular quarterly reports.
Such a jump — coming during a period that included a second season of Netflix’s most popular TV series ever, two live NFL games aired on Christmas Day and a live boxing match featuring a 58-year-old Mike Tyson — naturally raises questions about sustainability. But Netflix co-chief executive Greg Peters said during the company’s earnings call on Tuesday that the three aforementioned titles were responsible for “a small minority” of total subscriber additions in the quarter.
And Netflix is feeling good enough to raise its prices yet again. Rates on its three U.S. plans will be going up by an average of 13%, including the first-ever hike for the ad-supported plan, which is going up $1 from its $6.99 a month launch price in late 2022.
The double-feature of blowout subscriber growth and price hikes sent Netflix shares up more than 14% after hours Tuesday. That follows an already strong run that has boosted the stock by 80% over the past 12 months. Netflix’s market capitalization now exceeds the combined value of streaming rivals Disney, Comcast, Warner Bros. Discovery and Paramount.
Is this as good as it gets for the streaming titan? Netflix has been telegraphing its plan to phase out the reporting of subscriber numbers for a while now. The company says it now measures its performance on revenue and earnings growth as its business has grown more complex with the addition of advertising and account-sharing options. That could smooth out some post-earnings volatility; Netflix shares have made double-digit swings following eight of its last 16 quarterly reports, according to FactSet data.
But companies also typically stop reporting discretionary metrics when those metrics are no longer helpful to their growth stories. Apple conveniently stopped disclosing device unit sales in 2018 when the iPhone business matured. And with its global subscriber base now topping 300 million and well ahead of any streaming rival, delivering such massive growth numbers in any given quarter will keep getting harder for Netflix.
Ahead of Tuesday’s report, analysts were expecting Netflix to average about 18.6 million new subscribers annually for the next three years, according to estimates from Visible Alpha. The company has averaged about 27 million new subscribers annually over the past five years.
The new Netflix, which will be one of only 20 companies on the S&P 500 to carry a market value in excess of $400 billion, will thus have an even greater impetus to continue delivering steady gains on both the top and bottom lines. In a step that bodes well, Netflix edged up its 2025 revenue forecast on Tuesday despite the stronger U.S. dollar. It also projected record operating margins of 29% — up more than 10 percentage points from five years ago.
In a year likely to feature even more volatility in the troubled media market, a bit less drama from the market’s leader will be welcome.