((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Recast entire text, updated action in paragraph 1) by Harshita Mary Varghese
Shares of Netflix NFLX.O soared 15% to an all-time high on Wednesday, after the streaming giant bet on sports to add a record 18.9 million subscribers during the quarter end-of-year holidays, reassuring investors that it still has room to grow.
The company also unveiled price hikes Tuesday in some markets, including the United States, in a bid to boost revenue just as it shifts focus from subscriber growth to other metrics. performance, such as sales.
“We thought it was a typo. Netflix defied the odds once again, increasing its subscriber numbers well beyond the most unreasonable predictions,” said analyst Laurent Yoon at Bernstein.
Netflix, already worth more than the combined valuations of rivals Disney, Comcast, Paramount and Warner Bros. Discovery, was expected to add nearly $56 billion to its roughly $370 billion market capitalization, based on stock moves. actions before placing on the market.
Its shares have soared more than 80% in the last year, driven by Netflix's expansion into live sports, with content such as a boxing match between Jake Paul and Mike Tyson, as well as the launch of popular National Football League games on Christmas Day, with a halftime performance from popstar Beyonce.
The November 15 Tyson-Paul fight was the most-streamed sporting event of all time and generated the highest number of Netflix signups since Antenna began tracking this data in 2019. The second season of “Squid Game” and the hit film “Carry-On” were also released during the quarter.
Netflix's global subscriber base now exceeds 300 million, giving it a dominant position in the streaming wars and giving it more leverage in negotiations with marketing companies as it seeks to expand its business financed by advertising.
-“Sports rights can be incredibly expensive and it makes sense that Netflix has opted for special events. These events are also great for attracting advertisers looking to reach a large audience,” said Dan Coatsworth, analyst at AJ Bell.
Mr. Coatsworth, along with several other analysts, said Netflix would inevitably begin bidding for other major sports rights. The company has already secured U.S. broadcast rights for the 2027 and 2031 editions of the FIFA Women's World Cup.
TURNOVER SLIGHTLY HIGHER THAN FORECAST
These good results, however, mask a problem: the increase in the number of subscribers has not translated into a similar increase in revenue. Revenue rose 16% and only beat estimates by about $100 million, while subscriber numbers were twice as high as expected.
According to Ben Barringer, technology analyst at Quilter Cheviot, this slow growth can be attributed both to the increase in the number of subscribers in countries where the average revenue per user is lower and to the large number of registrations for the version with advertising support.
He adds, however, that the price increases already announced and those expected to be implemented during 2025 should stimulate sales.
This year, Netflix is expected to introduce new seasons of popular series such as “Stranger Things” and “Wednesday.” The company has already started streaming “WWE RAW”
At least 20 analysts raised their price targets on the stock, bringing the median target to $970, according to LSEG data. The stock's 12-month price-to-earnings ratio stands at 35.43, compared to Walt Disney's 19.19.
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