Netflix stock jumps 12% after company said paid subscribers surged by 8.5M in the holiday quarter as cold weather and new lockdowns set in
Netflix stock surged on Tuesday after the streaming company reported a jump in new subscribers for the holiday quarter, beating Wall Street estimates.
The company said it added 8.51 million paid subscribers during the quarter ended December 31, beating analysts' estimates of 6.1 million, according to IBES data from Refinitiv.
It marked a major rebound in subscriber growth after a sluggish third quarter, in which Netflix only added 2.2 million paid users.
In the fourth quarter, Netflix originals like Bridgerton and The Queen's Gambit helped the service attract more viewers, many of whom who were sheltering at home due to new COVID-19 restrictions and as winter descended.
Netflix admitted in a letter to shareholders that it faces increased competition, and said it would continue to pour money into originals like 'Bridgerton'
Subscriber growth by year is seen in this chart released by Netflix on Tuesday
Shares of Netflix jumped as much as 12 percent in after-hours trading on Tuesday
Shares of Netflix jumped as much as 12 percent in after-hours trading on Tuesday, when the quarterly results were announced.
It marked the latest twist in the 'Streaming Wars', with Netflix acknowledging in a letter to shareholders that it faces heated competition from HBO Max, Disney+ and others.
'The big growth in streaming entertainment has led legacy competitors like Disney, WarnerMedia and Discovery to compete with us in new ways, which we've been expecting for many years,' the letter said.
'This is, in part, why we have been moving so quickly to grow and further strengthen our original content library across a wide range of genres and nations.'
Netflix now has 203 million paid subscribers worldwide, versus Disney+ at 86.8 million global paid subscribers.
In the fourth quarter, Netflix originals like 'The Queen's Gambit' helped the service attract more viewers who were sheltering at home
HBO Max reports 38 million 'activations' in the U.S. but this number includes 12.7 million who already pay for the content through their cable package.
Netflix on Tuesday reported fourth quarter revenue of $6.64 billion, beating expectations.
Earnings per share were $1.19, lower than the $1.39 that analysts had expected.
Netflix said it would no longer need to raise external financing for daily operations and would even explore returning cash to shareholders through stock buybacks.
The last time Netflix pursued buybacks was 2011, when it pivoted from DVDs-by-mail to streaming.