A woman starts Netflix on a television in her apartment.
Arthur Widak | NurPhoto | Getty Images
Netflix Shares rose 16% on Thursday following a promising quarterly earnings report.
The streaming giant reported several successes, including a 70 percent increase in its new ad-supported subscription tier.
In terms of total subscribers, Netflix added 8.76 million subscribers in the third quarter, well above Wall Street’s 5.49 million estimate. It’s the biggest subscriber increase since the second quarter of 2020, when coronavirus stay-at-home restrictions drove new sign-ups.
Wednesday’s report confirmed a return to growth for Netflix – after the company posted its first net subscriber loss in over a decade in April 2022, raising fears that the market was saturated – and several analysts celebrated the positive news.
Analysts at Morgan Stanley upgraded the stock to overweight and raised their price target to $475.
“We believe Netflix will meet the targets set a year ago, accelerate revenue growth back to double digits and expand margins,” Morgan Stanley said in an analyst note Thursday.
Truist analyst Matthew Thornton said in a note Thursday that the crackdown on password sharing could continue to drive subscriber growth next year. The company also upgraded Netflix to Buy and increased its price target to $465 from $430.
“We are moving to Buy as our thesis is based on the continued benefits of password sharing (through 2024), advertising growth (long-term), and stock buybacks (plus $10 billion), representing the top three tentpoles through 2025 ( Squid Game, Wednesday, Stranger Things), with video games as a free call option and with optional growth levers for NFLX,” Thornton said in the note.
Netflix stock chart after third quarter results.
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