Investing in Netflix Stocks: Key Insights into NFLX's Surge

Netflix Stocks: Earnings and Future Outlook

On Thursday, October 17, Netflix (NASDAQ: NFLX) treated its investors to a particularly strong earnings report covering the third quarter (Q3) of 2024. In the filing, the company unveiled impressive figures in all relevant categories and offered strong forward-looking guidance.

Additionally, Netflix stated it plans to continue strengthening its core movie and TV show offerings in the coming years, continue expanding into gaming, and improve its advertisements initiative.

Ad-Supported Tier Growth

The ad-backed tier growth has been noted as particularly strong as it saw its membership rise 35% from quarter to quarter. Still, the streaming giant noted it does not expect commercials to become a major driver until 2026.

Investors had an immediate and highly positive reaction to the announcements – particularly considering that NFLX stock experienced a 2.04% drop in the final session before the Q3 report was published. In the extended session between Thursday and Friday, Netflix shares are up 5.15% as they rose from their latest closing price of $687.65 to their press time price of $723.04 – just shy of a $37 increase.

Netflix's Strong Financial Performance

Delving into the details, Netflix announced its earnings-per-share (EPS) amounted to $5.40 – well above the forecasted $5.12. Simultaneously, EPS saw a vast improvement compared to Q3 2023, when it stood at $3.73.

As could be expected considering the figures, net income rocketed from $1.68 billion in Q3 2023 to $2.36 billion in Q3 2024.

• Revenue Growth: The revenue for the quarter amounted to $9.83 billion, notably higher than the expected $9.77 billion and more than a billion above the $8.54 billion in Q3 of the previous year.
• Membership Performance: Netflix recorded 282.7 million paid memberships, slightly below the anticipated total.
• However, the quarter saw an influx of 5.1 million customers, exceeding forecasts.

Looking Ahead

Looking forward, the streaming giant revealed it expects its revenue to rocket to $10.13 billion in the final trimester of the year but that the EPS will be slightly lower at $4.24. Additionally, Netflix expects to make between $43 and $44 billion in revenue in 2025 as it expands the ad-backed tier to Canada, but it will stop reporting subscriber numbers during the same year.

While Netflix’s forward guidance appears strong, it is worth remembering NFLX stock has already enjoyed notable success in 2024, rising 46.78% since January 2.