Netflix Stock Hits Record Highs After Crushing Earnings Expectations
Shares of Netflix (NASDAQ: NFLX) soared to fresh all-time highs on Friday, boosted by a strong earnings report. The media streaming pioneer's stock had gained by 10.7% by 11:10 a.m. ET, adding up to a gain of 120% in 52 weeks.
Sales and earnings breezed past expectations
Netflix's top-line revenue rose 15% year over year in the third quarter, landing at $9.83 billion. That's slightly ahead of a 14.4% increase in global memberships over the same period, including a net increase of 5.1 million accounts in the third quarter. Earnings stopped at $5.40 per diluted share, 45% above the year-ago reading.
Your average analyst would have settled for earnings near $5.16 per share on sales in the neighborhood of $9.78 billion. Netflix also exceeded management's guidance for all six of the financial targets given in the second-quarter report, and guidance figures for the next quarter came in above current Street expectations.
The road ahead looks clear
The company achieved these analyst-stumping results despite some macroeconomic headwinds. Sales were up 21% year over year on a currency-adjusted basis, and average revenue per member (ARM) rose 5% after the same foreign currency adjustment.
The first half of 2024 was hampered by last year's writer and actor strikes, delaying many film and series premieres to the second half or 2025. Netflix is still dealing with these schedule adjustments, but many belated premieres are coming up in the fourth quarter.
Netflix is delivering on its stated targets, optimizing the business plan for revenue growth and expanded operating margin. These trends should continue in the fourth quarter and beyond as Netflix takes advantage of a more robust macroeconomic environment and continued cord-cutting trends.
Netflix's stock is trading at record highs today, and for all the right reasons.
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Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
Netflix Stock Hits Record Highs After Crushing Earnings Expectations was originally published by The Motley Fool