Netflix’s Remarkable Financial Growth: A Strong Year for the Streaming Leader
Los Gatos, California-based Netflix, Inc. (NFLX) continues to redefine entertainment with its diverse offerings, including TV series, documentaries, feature films, and games. With a market capitalization of $339.8 billion, Netflix has a presence in over 190 countries around the globe.
Stock Performance Exceeds Market Expectations
The streaming service has outperformed the wider market this past year. NFLX stock has increased by 63.3% year-to-date (YTD) and 82.1% over the past 52 weeks, significantly surpassing the S&P 500 Index’s ($SPX) gains of 25.7% YTD and 36.8% over the past year.
Dominating the Competition
Additionally, NFLX has left the Invesco Next Gen Media and Gaming ETF’s (GGME) 31.8% YTD return and 45% annual gain trailing in its wake.
Strong Q3 Earnings Boost Investor Confidence
On Oct. 17, Netflix saw its stock rise by 11.1% after announcing impressive Q3 earnings. The company reported a 15% increase in total revenues year-over-year, totaling $9.8 billion. This growth was primarily fueled by a surge in paid subscribers. The Asia-Pacific region led the way with an 18.9% increase in streaming revenue, reaching $1.1 billion, aided by a 24% jump in paid memberships to 52.6 million. Meanwhile, the U.S. and Canada saw a revenue growth of 15.7%, and EMEA experienced a 16.3% rise. However, Latin America struggled slightly with an 8.6% increase to $1.2 billion, attributed to a loss of 68,000 subscriptions in the quarter.
Profitability followed suit; Netflix’s net income rose by 40.9% year-over-year to $2.4 billion. The earnings per share (EPS) hit $5.40, exceeding analysts’ expectations by 6.1%, which enhanced investor confidence.
Future Earnings Outlook and Analyst Recommendations
For the current fiscal year, which ends in December, analysts anticipate a 64.4% increase in EPS to reach $19.78. This earnings surprise history has shown mixed results, with Netflix exceeding estimates in three out of the past four quarters.
NFLX currently holds a consensus “Moderate Buy” rating. Among the 41 analysts monitoring the stock, 23 recommend a “Strong Buy,” two support a “Moderate Buy,” 14 suggest holding, and two advise a “Strong Sell.”
On Oct. 29, Guggenheim analyst Michael Morris reaffirmed a “Buy” rating on NFLX while raising the price target to $825.
At the time of writing, NFLX is trading above its average price target of $774.58. The Street’s highest target of $925 implies a potential upside of 16.3% based on current prices.
More Stock Market News from Barchart
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) positions in any of the securities discussed in this article. The information in this article is for informational purposes only. For further details, please refer to the Barchart Disclosure Policy.
The opinions expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.
