On January 22, Netflix's stock surged 13% to an all-time high following its successful venture into sports streaming, resulting in a new record for subscriber additions in the holiday quarter and further solidifying its leading position in the industry.
The company announced price increases in various markets, aiming to drive revenue growth while transitioning focus from subscriber acquisition to other key performance indicators. Analyst Laurent Yoon from Bernstein noted, "Netflix defied the odds once again" with unprecedented subscriber growth.
With a global subscriber base exceeding 300 million, Netflix has significantly outpaced its competitors and strengthened its bargaining power with advertisers as it expands its ad-supported business.
The stock reached a peak of $988 during morning trading, potentially paving the way for a stock split, as it added over $50 billion to its market capitalization of approximately $370 billion.
In 2021, Netflix's shares surged over 80% driven by its foray into live sports broadcasting, including popular events like the Jake Paul vs. Mike Tyson boxing match and NFL games on Christmas Day, featuring performances by Beyoncé.
The company's successful content strategy last quarter included hits like "Squid Game" and "Carry-On", alongside premium sports events which attracted a large audience and advertisers.
Analysts anticipate Netflix will now start bidding for additional major sports rights, following its recent acquisition of FIFA Women's World Cup broadcast rights for 2027 and 2031.
While the robust subscriber growth was impressive, there was a concern that it didn't lead to a proportional increase in revenue, attributing this to growth in lower average revenue per user countries and significant sign-ups for the ad-supported tier.
Looking ahead, the rollout of planned price increases over 2025 is expected to bolster sales, especially with highly anticipated releases like new seasons of "Stranger Things" and "Wednesday", as well as the streaming of "WWE RAW".
Analysts have raised their price targets for Netflix, with the median target now at $1,025. The stock's forward price-to-earnings ratio currently stands at 35.43, compared to Walt Disney's 19.19.