Netflix stock zooms 15% to hit record high of $988 on subscriber growth boost, global base swells to 300 million

Shares of Netflix soared 15% to an all-time high on Wednesday after the streaming giant’s big bet on sports helped add a record 18.9 million subscribers in the holiday quarter, ballooning its already sizeable advantage over other players.

The company also unveiled price hikes on Tuesday in markets including the U.S., aiming to boost revenue just as it shifts focus from subscriber growth to other performance metrics such as sales.

“We thought it was a typo. Netflix defied the odds once again, delivering subscriber additions far beyond even the most unreasonable subscriber bogey,” Bernstein analyst Laurent Yoon said.

The company’s global subscriber base now exceeds 300 million, giving it a commanding lead in the streaming wars and more leverage in talks with marketing firms as it looks to grow its ad-supported business.

Netflix, already worth more than the combined valuations of rivals Disney, Comcast, Paramount and Warner Bros Discovery, was set to add more than $50 billion to its market capitalization of about $370 billion, if gains hold.

The stock hit a record high of $988 during early morning trading on Wednesday, paving the way for a potential stock split.

Its shares soared more than 80% last year, driven by Netflix’s expansion into live sports with content including a boxing match between Jake Paul and Mike Tyson, as well as the debut of popular National Football League games on Christmas Day – which included a half-time performance from popstar Beyonce.

The Nov. 15 Tyson-Paul bout was the most-streamed sporting event ever and drove the most sign-ups for Netflix for any event since Antenna started tracking this data in 2019. Its strong content slate in the quarter also included the second season of “Squid Game” and the hit streaming movie “Carry-On”.

“Sports rights can be incredibly expensive and it makes sense that Netflix has opted to go with special events. Such events are also perfect for attracting advertisers keen to reach a large audience,” said Dan Coatsworth, analyst at AJ Bell.

Coatsworth, as well as several other analysts, said Netflix would now inevitably start bidding for other major sports rights. The company has already secured U.S. broadcast rights for the 2027 and 2031 editions of FIFA Women’s World Cups.

The strong report, however, masked one concern: the subscriber surge did not translate into a similar spike in revenue. Sales rose 16% and were only around $100 million above estimates, while the subscriber growth was about twice the expected number.

The narrow beat could be attributed to both subscriber growth from lower average revenue per user (ARPU) countries and the significant number of sign-ups for the ad-supported tier, said Ben Barringer, technology analyst at Quilter Cheviot.

But he added that the already announced price hikes and those expected to roll out over the course of 2025 should boost sales.

This year, Netflix is expected to showcase new seasons of highly popular shows such as “Stranger Things” and “Wednesday”. It has already started streaming “WWE RAW.” The stock’s 12-month forward price-to-earnings ratio stands at 35.43 compared with Walt Disney’s 19.19.

The company added 18.9 million customers in the fourth quarter, according to a shareholder letter Tuesday. That was more than double what Wall Street expected and brought global subscribers at Netflix to more than 300 million. The company’s previous best was 15 million in the first quarter of 2020 — numbers driven by the onset of the coronavirus pandemic.

The stock soared as much as 15% as markets opened in New York, its biggest intraday gain since October 2023.

This is the final time Netflix will report quarterly subscriber numbers. The company’s stock has historically risen and fallen based on customer additions, but management is trying to get investors to prioritize financial metrics like sales and profit. The company reported revenue grew 16% to $10.2 billion for the quarter, the biggest gain since late 2021, and said sales will grow faster than predicted in 2025.

Netflix will boost sales by increasing prices in its home market. The company is raising prices in the US, Canada, Portugal and Argentina, with the most popular US plan going to $17.99 a month, an increase of $2.50. Netflix is also increasing the cost of its cheaper advertising-supported plan.

For the year, the company projects revenue of as much as $44.5 billion, a gain of 14% from the year just ended, with an operating margin of 29%.

Shares of the streaming leader rose about 15% in premarket trading on Wednesday after closing at $869.68 in New York. That would mark the biggest gain since October 2023 if it holds when US exchanges open.

Netflix will stop reporting subscriber figures following a surge in new customers from its crackdown on password sharing. Analysts and investors had expected the benefits from that effort to wear off by now, but Netflix just posted its single best year ever in terms of subscriber additions, netting 41 million new customers.

The company credited a mix of programming, including the hit movie Carry-On and the second season of Squid Game, its most popular series ever. The company said no program accounted for a majority of its additions.

Yet a boxing match between Jake Paul and Mike Tyson delivered a record number of sign-ups for one day, according to the research firm Antenna, dwarfing even Netflix’s first National Football League games. The second of those games featured a halftime performance by Beyoncé.

“Our newly established live programming slate has already delivered some must-watch moments,” the company wrote in its letter. “Although our live programming will likely be a small percentage of our total view hours and content expense, we think the eventized nature will result in outsized value to both our members and our business.”

Live programming is vital as Netflix builds out its advertising business. The company shows advertising during football and wrestling to all of its members — not just those on the less-expensive, advertising-supported tier.

The streaming giant got off to a slow start in advertising and has said it won’t produce material financial benefits until 2026. But it’s starting to make progress. The majority of new customers opt for advertising in the 12 markets where it is available, and the company said it would have enough scale to satisfy advertisers by the end of this year.

Management has eschewed buying the rights to most major sporting events, arguing they are too expensive. Yet it did license the rights to the FIFA Women’s World Cup and is seen as a potential partner for the Ultimate Fighting Championship.

“We’re constantly trying to broaden our programming,” co-Chief Executive Officer Ted Sarandos said during an interview with analysts after the results were announced. Netflix has had less success with video games, another new initiative.

This quarter, Netflix is forecasting revenue of $10.4 billion and earnings of $5.58 a share, both below the average of Wall Street estimates. Netflix has rebounded from a brief downtown a couple of years ago to post record growth while many of its peers in Hollywood have cut costs and struggled to grow.