Streaming giant Netflix (indicated at $538, up 9% overnight) had a spectacular fourth quarter, hitting $8.8 billion in revenues, up 12% YoY, compared to $7.8 billion a year ago. The company posted a profit of $940 million, or $2.11 per share, up from just $60 million, or $0.12 a year ago, with a beat on consensus estimates on the top and bottom lines, coupled with healthy core metrics lifting the stock as high as $50, following the results, in the post and pre-market trading.
The company’s full-year figures were just as impressive, with $33.7 billion in revenues, up 7% YoY, compared to $31.6 billion, with a profit of $5.4 billion, or $12.03 per share, against $4.5 billion, or $9.95 during the same period a year ago. In the midst of all this, Netflix’s guidance for the upcoming first quarter of 2024 stole the spotlight, with $9.2 billion in revenues, up 13% YoY, and profits expected to more than double.
Netflix unveiled a slew of changes to its platform in 2023, starting with the crackdown on password sharing, followed by lower-tiered pricing, and ad-supported accounts. These initiatives have exceeded all expectations, with 13 million new subscriber additions during the fourth quarter alone, bringing its total headcount to a record 260 million, well ahead of estimates.
These changes were complemented by a strong slate of new releases during the quarter, such as the final season of its long-running royal drama, The Crown, among many others. This is amidst the sea of other content that keeps viewers around the world hooked, leading many observers and analysts to conclude once and for all that Netflix has won the online streaming game.
Despite rising competition from all over the world, Netflix is the only company in this space that has consistently posted growth, while remaining profitable. This year it plans to invest $17 billion in fresh content, and just signed a $5 billion deal to livestream the World Wrestling Entertainment’s RAW, along with other exclusive programming and content on the platform by 2025.
The stock has rallied over 35% during the past year, and 48% if you include today’s big jump, and shows no signs of slowing down as the company goes on the offensive to unlock more value across its platform. We love the fact that the company is buying back its stock. During the fourth quarter alone, Netflix repurchased $2.4 billion worth, made possible by its strong and growing balance sheet position with $7.1 billion in cash, $15 billion in debt, and a massive $7.3 billion in free cash flow. Our Target has been a big $590 because we believe so much in this company. We would not sell Netflix. Would you like to know why? Take a peek at this chart and YOU decide:
| Year | Number of Subscribers (Millions) |
| 2014 | 57 |
| 2015 | 69 |
| 2016 | 82 |
| 2017 | 94 |
| 2018 | 137 |
| 2019 | 158 |
| 2020 | 195 |
| 2021 | 209 |
| 2022 | 221 |
| 2023 (Q3) | 247 |