Why Netflix Stock Could Continue to Hit All-Time Highs News ad

Netflix NASDAQ: NFLX completely defied analyst expectations in its latest earnings report, sending shares up more than 14% in after-hours trading on Jan. 21. The consumer services company’s subscriber count grew by a staggering 19 million. That helped push the stock above its late 2024 all-time high. Netflix shares have outperformed by a significant margin in 2024, gaining 83%, more than three times the return of the S&P 500. The earnings surge ends the company’s recent slide, which saw its shares fall more than 10% since December 11, 2024. until January 13, 2025. .

Below, I’ll take a closer look at the report that led to the stock’s meteoric rise and detail the events that led to this massive success. I’ll also share my thoughts on why Netflix stock could continue to hit all-time highs in 2025 and beyond.

Netflix’s Subscriber Gain Breaks Estimates

Netflix’s subscriber increase of 19 million was extremely impressive, nearly doubling Wall Street’s expected 8.9 million subscribers. The absolute number of quarterly new subscribers was the largest in the company’s history. Overall, this helped the company increase its subscriber count by 40% for all of 2024. This demonstrates Netflix’s ability to continue its rapid growth despite already being the world’s largest streaming service. Revenue beat estimates by $140 million to $10.25 billion. The company also comfortably beat earnings per share (EPS). He also raised his 2025 revenue forecast by $500 million.

Important new releases on the platform, as well as the company’s foray into live sports streaming, have contributed to the huge growth in its subscriber base. This included the premiere of the second season of the game “Squids,” which is now the third most popular television season in the company’s history. In addition, the company’s broadcasts of the Jake Paul vs. Mike Tyson boxing match and two National Football League Christmas games attracted huge audiences.

Overall, these events were watched by 108 million viewers and 65 million viewers respectively. While these developments have gone a long way toward helping Netflix close out 2024, the company’s plans for the future show that growth is far from over.

Netflix can raise prices without losing users

Another major development in Netflix’s earnings report was the company’s decision to increase subscription prices. The company’s prices will increase for standard, premium and promotional subscriptions. The increase will range from 8% to more than 16% in the US, depending on the plan. Netflix has increased the prices of its most popular standard plan for the first time since 2022.

This represents a rare opportunity for the company to increase revenue. However, the last time Netflix raised prices by this level, it saw a noticeable increase in customer churn. Churn measures the percentage of users who stop using a product over a given period. Outflows increased from 2% in 2021 to 3.5% in the first nine months of 2022.

However, there is reason to believe that this will not happen this time. First, the rise in churn in 2022 coincided with a significant increase in churn among most streaming services. This makes it difficult to say what negative effect the price increase actually had.

Second, Netflix will likely remain the cheapest streaming service that users can buy per hour of viewing. This is a testament to Netflix’s ability to produce a lot of high-investment content, which has allowed the company to maintain industry-leading low churn rates.

Another way Netflix can minimize customer churn due to price increases is the Standard with Ads tier. The company introduced it in October 2023. Even though this tier’s price has increased to $7.99, it’s still tied with the cheapest plan offered since 2017. The low-cost plan is likely to attract users with limited funds who have been impacted by rising prices. They should lower prices as prices rise rather than canceling subscriptions entirely.

Live broadcasts and increased advertising levels are long-term success factors

The advertising level is part of another of Netflix’s key initiatives for 2025: growing advertising revenue. Netflix doubled the size of this business in 2024 and plans to do so again in 2025. It’s still a relatively small part of the overall business, making it a long-term growth driver.

Finally, the company is just getting started in the live events space. This will be another driver of long-term growth, as evidenced by the success already achieved. The company will continue to host WWE Raw and has signed a deal with exclusively broadcast the 2027 and 2031 Women’s World Cups..

You might want to hear this before you consider Netflix.

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