Netflix Surges On Strong Q4 Results, Stock Buyback Announcement

Netflix Inc. (NFLX) witnessed a remarkable 14% surge in after-hours trading on Tuesday following its announcement of robust fourth-quarter results. The streaming giant added 18.9 million users during the period, significantly surpassing Wall Street’s expectations, while its revenue and earnings comfortably beat projections.

The company further energized investor sentiment by unveiling a $15 billion stock buyback plan and raising its full-year revenue forecast. Netflix now anticipates 2025 revenue to range between $43.5 billion and $44.5 billion, up from its earlier estimate of $43 billion to $44 billion.

Subscriber Growth and Price Adjustments

Netflix attributed its strong subscriber growth to popular programming, including two NFL games, the highly anticipated “Jake Paul vs. Mike Tyson” boxing match, and the return of the hit series “Squid Game.” These events capped off a stellar year, driving momentum into the final quarter of 2024.

In tandem with the growth, Netflix confirmed price increases for its streaming plans in select regions, including the U.S., Canada, Portugal, and Argentina.

The ad-supported plan now costs $7.99, up from $6.99.
The Standard, ad-free tier increased to $17.99 from $15.49.
The Premium plan rose to $24.99, a $2 hike.
Adding an extra member will cost $8.99, a $1 increase.

The price adjustments reflect the company’s strategy to balance revenue growth with its expanding portfolio of premium content.

Live Events Drive Viewer Engagement

During the earnings call, Co-CEO Greg Peters emphasized that the subscriber surge wasn’t tied to a single event, despite the company’s recent push into live sports programming.

“We’ve consistently seen across our history that no single title drives the majority of acquisition or engagement,” Peters explained.

In November, Netflix’s broadcast of the “Jake Paul vs. Mike Tyson” match attracted over 108 million global viewers, becoming the most-streamed sporting event in history. For comparison, the 2024 Super Bowl, the most-watched American TV broadcast ever, garnered 124 million U.S. viewers.

Additionally, NFL games on Netflix averaged 30 million viewers, making Christmas Day 2024 the platform’s most-watched U.S. holiday event. Netflix is also exploring further sports opportunities, recently launching WWE Raw and fueling speculation about a potential bid for UFC rights.

However, the company clarified in its shareholder letter that its live strategy focuses on “can’t-miss, special event programming” rather than acquiring extensive regular-season sports packages.

Financial Performance

Netflix reported fourth-quarter revenue of $10.25 billion, exceeding Bloomberg’s consensus estimate of $10.11 billion and marking a 16% year-over-year increase. For Q1 2025, the company expects revenue of $10.42 billion, slightly below analyst estimates of $10.48 billion.

Earnings per share (EPS) for the quarter stood at $4.27, beating the consensus estimate of $4.18 and significantly higher than the $2.11 reported in the same period last year. Netflix projected Q1 EPS at $5.58, trailing Wall Street’s forecast of $6.01.

Operating margins also impressed, reaching 22.2% for Q4 and 27% for the full year. The company forecasts Q1 operating margins to rise to 28.2%.

Competitive Landscape

Netflix acknowledged the challenges of an intensely competitive market but highlighted its advantage of not managing declining linear networks, unlike some of its rivals.

“Our business remains intensely competitive with many formidable competitors across traditional entertainment and big tech,” the company noted. “With our focus and continued investment, we have good and improving product/market fit around the world.”

As Netflix continues to expand its content offerings and experiment with live events, the company appears well-positioned to maintain its lead in the evolving streaming landscape.