Internet television network Netflix late Tuesday beat Wall Street's targets for new subscribers and revenue in the fourth quarter. But its earnings were light and guidance was mixed. Still, Netflix stock jumped in extended trading.
The streaming video leader added 13.12 million new subscribers in the fourth quarter, easily beating estimates for 8.69 million. It ended 2023 with 260.28 million subscribers worldwide.
The Los Gatos, Calif.-based company earned $2.11 a share on sales of $8.83 billion in the December quarter. Analysts polled by FactSet had expected earnings of $2.22 a share on sales of $8.72 billion. In the year-earlier period, Netflix earned just 12 cents a share on sales of $7.85 billion.
For the current quarter, Netflix predicted earnings of $4.49 a share on sales of $9.24 billion. Analysts had been looking for earnings of $4.10 a share on sales of $9.27 billion in the first quarter. In the year-earlier period, Netflix earned $2.88 a share on sales of $8.16 billion.
Netflix Stock Jumps After Report
Netflix stock rose 8.4% to 533.50 in after-hours trading on the stock market today. During the regular session Tuesday, Netflix stock advanced 1.3% to close at 492.19.
Ahead of the report, Netflix stock was trading in the 5% buy zone of its breakout last month. On Dec. 18, Netflix stock broke out of a 22-week consolidation pattern at a buy point of 485, according to IBD MarketSmith charts.
In the past month, Netflix has twice fallen out of the buy zone but has remained above the stop-loss sell zone. In a bullish sign, Netflix stock has found support at its 50-day moving average line.
"We believe there is plenty of room for growth ahead as streaming expands," Netflix management said in a letter to shareholders.
The company's plans for 2024 include improving its core business of TV series and movies while broadening its offering with "games, live and sports-adjacent programming."
Netflix also set a goal to scale its advertising business. Plus, it wants to deepen its connection with fans through "marketing, consumer products and innovative new live experiences."
Netflix To Carry WWE Show 'Raw'
Earlier Tuesday, Netflix announced a deal with TKO Group Holdings to carry the WWE's flagship pro wrestling program "Raw" starting next year. The 10-year deal is worth over $5 billion.
Analysts say the WWE deal will help Netflix gain scale in online advertising. Earlier this month, Netflix revealed that its ad-based service tier has 23 million monthly active users. That's up from 15 million in November.
Streaming rivals also are boosting their ad businesses. For instance, Amazon Prime Video is moving all subscribers to an ad-supported platform starting Jan. 29, unless they opt to pay an additional $3 a month for an ad-free experience.
Netflix stock ranks second out of 20 stocks in IBD's Leisure-Movies & Related industry group, according to IBD Stock Checkup.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
