Netflix experienced an 11% surge in its stock on Wednesday, fueled by robust subscriber growth and heightened investor confidence, solidifying the company’s position as a streaming powerhouse. The streaming giant reported that 13.1 million new subscribers signed up for its service in the fourth quarter, surpassing expectations and marking its best growth since the beginning of the pandemic.
Investors responded positively to Netflix’s crackdown on password-sharing and its strong content lineup. The company’s shares reached a more than two-year high, and its market value was poised to increase by over $20 billion.
Analysts, recognizing Netflix’s dominant position in the streaming landscape, raised their price targets on the stock. Jeffrey Wlodarczak of Pivotal Research Group elevated his target to a Wall Street high of $700. More than half of the 44 analysts covering Netflix raised their targets, pushing the median view to $554.
Netflix’s valuation, trading at nearly 30 times its 12-month forward earnings, commands a premium relative to competitors like Walt Disney Co, which trades at 20.41 times forward earnings. Some analysts believe this premium is justified as Netflix’s push for profitability may lead other streaming services to license more titles to Netflix, bolstering subscriber growth and average revenue per user.
The company highlighted strong demand for licensed titles such as “Young Sheldon” and emphasized its commitment to original content. With plans to spend up to $17 billion on content this year, Netflix remains a major player in the industry. The streaming giant is also expanding its live programming, recently securing a more than $5 billion rights deal to exclusively bring World Wrestling Entertainment’s “Raw” and other programming to its service in January 2025.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, noted, “It (original content) doesn’t come cheap, and some would balk at Netflix’s annual content budget, but it’s this investment that keeps Netflix’s frame gilded.”
