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Netflix Breaks Records in Q4 Netflix Shines in Q4 Earnings Report, Shares Surge 14%

Netflix (NASDAQ: NFLX) experienced a considerable surge in stock value this past week following a stellar fourth-quarter earnings report, showcasing robust subscriber growth and offering optimistic guidance for the upcoming year.

A Netflix poster on a wall.

Image source: Getty Images.

Record-Breaking Quarter

Netflix demonstrated monumental success in the fourth quarter, dispelling any prior concerns about stunted subscription growth. According to data from S&P Global Market Intelligence, the stock surged by a remarkable 14% from the previous week as of 2:30 p.m. ET on Thursday.

The company reported a record-breaking 13.1 million subscriber additions for Q4, attributed to the introduction of a new advertising tier and measures to address password sharing. Notably, 40% of sign-ups in markets with advertising options opted for the ad tier, driving a surge in revenue.

Subscriber growth was evenly distributed across all four regions, with the EMEA (Europe, Middle East, and Asia) region adding a substantial 5 million subscribers. This expanded base, coupled with higher subscription fees, substantially boosted revenue, which experienced a 12.5% increase to reach $8.83 billion. Moreover, Netflix anticipates an even more accelerated revenue growth in the current quarter, projecting a 13.2% increase.

In a surprising turn, the company also revised its operating margin guidance for 2024, now expecting a 24% operating margin, up from the earlier range of 22% to 23% and an increase from the previously reported 21%. This upward revision indicates the potential for a significant rise in profits for the year 2024.

Competitive Advantages Regained

Netflix’s recent successes have reaffirmed its competitive edge within the industry. With a staggering 260 million subscribing households, the company has attracted major partners such as the WWE and Rockstar Games. Their collaboration has seen the availability of Grand Theft Auto: The Trilogy on Netflix, further solidifying the platform’s position in the entertainment industry.

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Despite the impressive numbers in Q4, Netflix’s continued focus on expanding its advertising business is proving to be a tremendous success, providing the company with an additional revenue channel. While achieving 13 million new subscribers each quarter is unlikely, Netflix’s expansion potential remains substantial, and its subscription-based model offers opportunities to improve margins as the platform continues to grow.

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Jeremy Bowman has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.