Netflix’s stock soared 11% in Friday’s trading, reaching a new high of over $760, following the company’s impressive third-quarter earnings that exceeded both EPS and revenue estimates. The streaming service reported a revenue of $9.83 billion, surpassing Bloomberg’s consensus of $9.78 billion and reflecting a 15% increase year-over-year. This growth was attributed to strategic revenue initiatives such as the crackdown on password sharing, the introduction of an ad-supported subscription tier, and price increases on certain plans last year.
Netflix anticipates fourth-quarter revenue to hit $10.13 billion, which is above the expected $10.01 billion. For the entire year of 2025, the company projects its revenue to be between $43 billion and $44 billion, slightly below the consensus of $43.4 billion, indicating an expected growth of 11% to 13% compared to the projected 2024 revenue of $38.9 billion.
The company’s operating margin is expected to rise to 27%, up from 26%, after reaching nearly 30% in the third quarter. Netflix’s diluted earnings per share (EPS) for the quarter was reported at $5.40, surpassing the anticipated $5.16 and significantly higher than the $3.73 EPS reported a year earlier. Looking ahead, the fourth-quarter EPS is projected at $4.23, outpacing the consensus estimate of $3.90.
Subscriber growth also exceeded expectations, with Netflix adding over 5 million subscribers during the quarter, driven by popular shows such as “The Perfect Couple” and “Nobody Wants This.” The addition of 5.07 million subscribers beat the expected 4.5 million, following 8.05 million new subscribers in the second quarter.
The company forecasts that subscriber increases will be even higher in the fourth quarter, fueled by timely releases including “Squid Game” Season 2 and a highly publicized boxing match. Investors have shown enthusiasm for Netflix’s move into live sports, and its ad-supported tier is gaining momentum, accounting for over 50% of new registrations in markets where it was available.
During the earnings call, co-CEO Greg Peters mentioned the ad business’s growth but noted that it won’t be the main revenue driver in the near term as they continue to scale up their audience and inventory. Netflix’s ad sales commitments have reportedly surged by over 150% compared to 2023.
In the lead-up to these results, Netflix’s stock had surged approximately 45% since the start of the year. Analysts suggest that a price increase could further boost shares, although concerns linger about subscriber engagement remaining flat year-over-year, which could impact pricing power.
Netflix last raised prices on its Standard and Premium ad-free plans in January 2022. The ad-supported tier remains competitively priced at $6.99 per month and has not seen a price increase since its launch. Some analysts predict a potential 12% price hike for the US market in 2025, considering the company’s low cost per viewing hour.
With these developments, Netflix’s stock continues to reach new heights, and investors are closely watching for possible future price adjustments.