Netflix (NFLX) stock surged over 14% in after-hours trading Tuesday following the company’s announcement of 18.9 million new users in the fourth quarter. This figure marks the largest quarterly subscriber gain in Netflix’s history, along with revenue and earnings surpassing expectations.
Netflix stock soars 14% on record subscriber growth
The streaming service also declared a $15 billion stock buyback and revised its full-year revenue outlook upwards. Netflix now anticipates 2025 revenue to be between $43.5 billion and $44.5 billion, an increase from the previous range of $43 billion to $44 billion.
Subscriber growth was bolstered by significant events, including two consecutive NFL games, a boxing match featuring “Jake Paul vs. Mike Tyson,” and the return of “Squid Game.” In light of these gains, Netflix announced price increases for its service. The company stated, “We are adjusting prices today across most plans in the US, Canada, Portugal and Argentina.”
The ad-supported plan will increase to $7.99 from the previous price of $6.99. The Standard ad-free tier will now cost $17.99, up from $15.49, while the Premium plan will rise by $2 to $24.99. Additionally, users looking to add an extra member will see the monthly fee increase by $1 to $8.99.
Wall Street analysts had projected that Netflix would report an increase of 9.18 million subscribers after it gained 13.12 million paying users in Q4 2023. The company announced last spring that it would cease to report subscriber metrics starting this year.
Netflix’s current price hikes come after a significant gap; the last increase in the standard tier occurred in early 2022, with a more recent raise for the premium plan in late 2023. The ad-supported service, priced at $6.99 since its late 2022 launch, is seeing its first price adjustment.
In early 2023, Netflix altered its strategy by cracking down on account sharing. This change required account holders to pay to add extra users or have those users acquire their own accounts. Notably, the ad-supported plan became a popular alternative for users who did not want to pay for the standard tier. On the earnings call, Co-Chief Executive Greg Peters described the ad tier as “an incredible entertainment value,” emphasizing that the new price represents “a highly accessible entry point.” During the last quarter, 55% of new signups were for the advertising tier where available.
Comparatively, the new $17.99 price for the standard tier is lower than the $18.99 charged for the ad-free version of Hulu and the $16.99 cost for the ad-free version of Max.
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