Netflix Shares Surge Over 6% on Strong Content and Subscriber Growth
Robust lineup boosts investor confidence despite expected slowdown from password-sharing crackdown.
Netflix surged over 6% on Friday, fueled by investor confidence that its strong content lineup will sustain subscriber growth, even as the impact of its password-sharing crackdown begins to diminish.
The company, widely regarded as the leader in Hollywood’s streaming wars, was poised to add roughly $18 billion to its market value, bringing it to around $295 billion based on premarket stock movements.
Netflix exceeded expectations for quarterly subscriber growth by over 1 million and forecasted even higher sign-ups for the final quarter of the year, coinciding with the return of the popular Korean series “Squid Game.”
Both profit and revenue outperformed estimates, a promising indication that Netflix is successfully shifting investor attention from subscriber growth to other financial metrics. This comes amid expectations from some analysts that subscriber growth will naturally slow following the initial success of its password-sharing restrictions.
The 5.1 million new subscribers Netflix gained in the third quarter fell short of the 8.76 million added in the same period last year.
“The third quarter demonstrated the anticipated slowdown in subscriber growth, but Netflix has other opportunities to improve its financial performance,” said Matthew Dolgin, an analyst at Morningstar.
Part of Netflix’s strategy involves raising prices. After implementing fee hikes in Japan, the Middle East, Africa, and parts of Europe in recent weeks, the company is now increasing prices in Italy and Spain, with some analysts predicting similar moves in the U.S. next year.
“While Netflix didn’t officially announce any price hikes, it hinted that there is room to raise prices with stronger user engagement,” Bernstein analysts noted.
The ad-supported subscription tier also showed progress, accounting for over 50% of sign-ups in countries where it was available during the third quarter. However, Netflix doesn’t expect advertising to become a major growth driver until 2026.
Following these results, at least eight analysts increased their price targets for Netflix stock, raising the median target to $750 from $706.38, according to data from LSEG.
