Netflix shares hit all-time high as Wall Street applauds ‘nearly flawless’ earnings.

Netflix shares (NFLX) surged to another all-time high, rising as much as 13.6% in early trading Wednesday, as Wall Street analysts praised the company’s fourth-quarter earnings results.

Shortly after the opening bell, the stock jumped to just under $1,000 a share as analysts rushed to raise their respective price targets. Pivotal Research raised its price target from $1,000 per share to $1,250, the highest on the Street.

The streaming giant reported a whopping 18.9 million users in the fourth quarter, while revenue and earnings also beat expectations. It was the largest quarterly increase in subscribers in the company’s history.

“The results for the fourth quarter were almost flawless,” Jefferies analyst James Heaney said in a note after the report.

Including Wednesday’s price action, Netflix shares are up about 100% year-to-date. Stocks hit multiple all-time highs in 2024, as many analysts call Netflix the winner of the tough streaming wars.

The company also announced a $15 billion share buyback and raised its full-year earnings outlook in its after-hours report on Tuesday. Netflix now projects 2025 revenue of $43.5 billion to $44.5 billion, up from the previous range of $43 billion to $44 billion.

The strong subscriber gains come as the streamer finished 2024 with two back-to-back NFL games, a successful “Jake Paul vs. Mike Tyson” boxing match and the return of “Squid Game.” To that end, the company said the price increases will affect service, which analysts had consistently teased going into print.

The company increased the price of its ad-supported plan to $7.99 from $6.99 previously. Its ad-free standard tier will now be $17.99, up from $15.49, while its Premium plan will increase by $2 to $24.99. Users who want to add an additional member will now pay $8.99, an increase of $1.

Wall Street had expected the streaming giant to report just 9.18 million subscribers after reaching 13.12 million paying users in the fourth quarter of 2023. The company announced last spring. it would stop reporting the metric earlier this year.

“With no more sub-reports to come, investor attention shifts to Netflix’s ability to monetize its membership base, with advertising and price increases helping to answer that,” Macquarie analyst Tim said on Wednesday Nollen

The company revealed that ad revenue doubled by 2024, and management guided for it to double again by 2025. Still, ad revenue is not expected to become the main driver of revenue until in 2026.

On the earnings call, Netflix co-CEO Greg Peters said the huge jump in subscribers wasn’t driven by one particular event, despite its recent live sports programming push.

“We’ve consistently seen throughout our history that no single title drives the majority of our acquisition or engagement,” Peters said, noting that live events accounted for a minority of new customers in the quarter.

Analysts were largely encouraged by this comment with Deutsche Bank’s Bryan Kraft writing to clients: “Management was very clear that the strength in Q4 net additions was not disproportionately driven by the Tyson vs. Paul fight, the NFL or any other title, so we don’t see any reason why the force won’t continue.”

In November, the match between Jake Paul and Mike Tyson attracted attention over 108 million global viewersbecoming the most televised sporting event of all time. For context, the 2024 Super Bowl, which was the most-watched American television broadcast everachieved 124 million viewers in the US.

Likewise, NFL games averaged about 30 million viewers. According to Netflix, it was the most watched Christmas Day ever in the United States. The company will continue to double down on sports amid the recent WWE Raw debut. rumor they have also swirled the company could make a bid for the UFC rights next.

Netflix said in its letter to shareholders that it is not focused on the rights to “big regular-season sports packages; rather, our live strategy is about delivering unmissable programming of special events.”

Revenue reached $10.25 billion in the fourth quarter, beating Bloomberg consensus estimates of $10.11 billion and marking a 16% increase compared to the same period last year. Netflix guided for first-quarter revenue of $10.42 billion, a miss compared to consensus estimates of $10.48 billion.

Diluted earnings per share (EPS) also beat estimates for the quarter, with the company reporting EPS of $4.27, above consensus expectations of $4.18 and well ahead of the figure for ‘EPS of $2.11 reported last year period. Netflix guided to fourth-quarter EPS of $5.58, below consensus calls for $6.01.

The Netflix logo is seen on a television remote control in this illustration taken January 20, 2022. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo · REUTERS / Reuters

Other profitability indicators were also strong, with operating margins of 22.2% in the fourth quarter and 27% for the full year 2024. Netflix expects first-quarter operating margins to widen to 28.2 %.

Analysts had expected operating margins to reach 22% in 4Q before jumping to 30% in the current quarter.

“Our business remains intensely competitive with many formidable competitors in traditional entertainment and big tech,” Netflix said in its letter. “We are fortunate to not have distractions like managing linear networks in decline, and with our continued focus and investment, we have a good and improving product/market around the world.”