In extended trading on Tuesday, Netflix experienced a surge in its shares following the announcement of robust fourth-quarter results.
The streaming giant added 13.1 million subscribers, surpassing Wall Street expectations, bringing its total paid subscribers to a record 260.8 million.
The company reported a net income of $937.8 million, or $2.11 per share, a substantial increase from the prior-year period.
Netflix is intensifying efforts to improve profitability and raised its 2024 full-year operating margin forecast to 24%.
The company also exceeded Wall Street’s expectations for the fourth quarter, reporting revenue of $8.83 billion.
While some streaming competitors are struggling with profitability and reducing content spending, Netflix is committed to investing in an extensive content slate.
However, the company clarified that it won’t pursue acquisitions of traditional entertainment companies or linear assets, expecting further consolidation among competitors.
Netflix continues to explore partnerships with content creators from the linear space, evident in its recent deal to stream WWE Raw.
The company anticipates ongoing competition and emphasizes the importance of enhancing its entertainment offering while competitors reduce content spend.
As Netflix transitions from prioritizing subscriber growth to focusing on profit, it employs strategies such as price hikes, password crackdowns, and ad-supported tiers to boost revenue.
The company sees potential in its advertising-based plan, with over 23 million global monthly active users reported.
While ads aren’t the primary revenue driver in 2024, Netflix aims to scale its ad business, making the ad tier more appealing to advertisers through enhancements in features and engagement.
Co-CEO Greg Peters expressed optimism about the long-term revenue potential of the ad business, highlighting Netflix’s commitment to further developments in this space.
Overall, Netflix’s strong performance and strategic initiatives position it favorably in the competitive streaming landscape.
Source-CNBC
