Netflix shares soared to a new all-time high of $999 per share on Wednesday after a blockbuster fourth quarter earnings report that included a record-breaking 18.9 million subscriber adds — nearly double Wall Street’s consensus estimates — for a total of 301.6 million globally and new price hikes on some of its plans. It also raised its outlook for revenue and its operating margin for 2025.
The stock, which opened the session at $998.02 per share, is currently trading below its new all-time high at around $965 per share, but is still up more than 11%. Its market capitalization currently sits at $413.57 billion — more than the combined market cap of competitors Disney, Paramount Global, Comcast and Warner Bros. Discovery.
“It was clear that Netflix was in the perfect position to deliver its last report on subscriber numbers with a boom. However, this was above our best expectations, testifying to the continued success of the company’s global, high-margin turnaround strategy on both the financial and consumer interest sides,” Investing.com senior analyst Thomas Monteiro said. “Not only did Netflix manage to bring sustained global interest in the core business without burning through the same type of cash as the competition, but it also showed fantastic momentum on the live events front, which remains an area of the market where streaming has massive room to grow.”
Wall Street analysts celebrated the news with a flurry of price target raises on the stock.
Pivotal Research’s Jeff Wlodarczak, who raised his price target from $1,000 to $1,250, declared that “this is what winning looks like” in the global streaming race. Going forward, he said that the company needs to “press their advantages” and keep the subscriber/ARPU flywheel going.
“The larger they get, the more leverage they have over their peers/content creators, the better their product gets (allowing them to drive subscriber/ARPU growth), the more cash they have to spend on compelling content and the bigger the moat grows around their core business model,” he noted.
Piper Sandler analyst Matt Farrell, who called the quarter a “knockout,” raised the firm’s price target from $950 to $1,100.
“We remain impressed with the company’s execution, as management continues to deliver positive surprises even at industry-leading scale,” he said. “Netflix remains our top large cap idea.”
Macquarie Research analyst Tim Nollen said Netflix is “going out with a bang” as he raised his price target from $965 to $1,150. The quarter marked Netflix’s last for quarterly subscriber disclosures as it shifts its focus to engagement, revenue and operating margins.
“With no more sub reporting to come, investor focus shifts to Netflix’s ability to monetize its member base,” Nollen said. “Advertising and price increases help answer this.”
MoffettNathanson analysts Robert Fishman and Michael Nathanson added that Netflix has proven the firm’s expectations wrong yet again and that it is “defying gravity.”
“At almost every turn we tried to apply the general laws of corporate physics as best as we understood them to a company that, at the end of the day,
is still in the business of selling video entertainment,” the pair wrote. “Yet,
Netflix executed almost flawlessly throughout the past year and, time and time again, demonstrated it is impervious to any notion of gravity. Or, perhaps better put, Netflix has proven itself to defy any notion of how a media company operates or grows.”
Still, Fishman and Nathanson remain more reserved than some of the other analysts, with a neutral rating on Netflix stock and a price target increase from $670 to $850.
Similarly, Wolfe Research analyst Peter Supino maintained a Peer Perform rating with a price target of $869.68. While acknowledging Netflix had a “quarter for the ages,” he expressed concern that the company’s high equity valuation is not discounting risks related to engagement growth, high penetration in the U.S. and Canada and Europe, Middle East and Africa regions and competition from short form.
He argued that it does “not provide much margin of safety to absorb the risk of paid sharing subscriber pull forwards nor the rapid rise of short-form engagement, YouTube and other streaming services aggressively investing in content vying for consumer time, limiting Netflix’s opportunity to grow viewership.”
Netflix stock is up 99% in the past year, 49% in the past six months and 9% year to date.
Source link
