Netflix’s Record-Breaking Quarter Bumps Up Share Price

Netflix shares surged over 10% in after-hours trading following a blockbuster fourth quarter that exceeded market expectations. Total revenue climbed 16% year-on-year to $10.25 billion, surpassing the $10.11 billion analysts anticipated. Earnings per share more than doubled to $4.27, up from $2.11 a year earlier. These results reflect the company's growing dominance, with global subscribers now reaching 302 million after adding 19 million new users in the quarter—double what analysts forecast.

The company's crackdown on password sharing and the success of its ad-supported tier, which drove 55% of new sign-ups in eligible markets, played key roles in its growth. Membership in the ad tier rose nearly 30% sequentially, highlighting its appeal among cost-conscious viewers and premium advertisers. 

Despite its success, Netflix’s operating margin dipped to 22%—the lowest in 2024—due to significant investments in sports programming. For the full year, revenue grew by 16%, and net income soared 62%. Regionally, the US and Canada generated 44% of sales, while Europe, the Middle East, and Africa contributed 32%. Both regions saw modest revenue growth of 4% and 1%, respectively.

What Does This Mean for Me?

Looking ahead, Netflix projects revenue between $43.5 billion and $44.5 billion in 2025, with operating margins improving to 29%. Free cash flow is expected to climb to $8 billion. With hit shows like Squid Game and Stranger Things set to return, Netflix is well-positioned to maintain its momentum and go some way to justifying future price hikes in markets such as the US and Canada.