Despite a rare earnings miss from Netflix after market close yesterday, Netflix shares rocketed 13% higher in pre-market trading on Wednesday at it passed the 200 million paying subscribers milestone, indicating the stock will open at a record high.
- Our list of the best TV shows on Netflix at the start of 2021
The company surpassed 200 million paid subscribers for the first time, powered by a world continuing to consume large amounts of content at home during the COVID-19 pandemic. Meanwhile, the raw numbers on the quarter suggest Netflix hasn’t seen subscribers balk at its latest price hike that hit in October.
“Importantly, while Netflix beat subscriber expectations in all major territories, Netflix’s most mature market U.S./Canada reported materially better than expected nearly +900K net new subscribers (vs. our +375K expectation) which highlights that the ultimate penetration for NFLX services globally could be higher than anticipated,” pointed out Pivotal Research Group analyst Jeff Wlodarczak.
Netflix guided to a first quarter operating margin of 25%. That would be a meaningful step up from the already impressive 14.4% rate in the fourth quarter. It added this nugget in the earnings release “we believe we no longer have a need to raise external financing for our day-to-day operations.” The company also raised its cash flow guidance for 2021 by $1 billion to breakeven… Netflix signaled it may resume stock buybacks soon, as it did from time to time from 2007 to 2011.
2020 was the year that home entertainment providers and streaming services thrived. As a result, it is expected for Netflix's stock to have skyrocketed at the start of 2021.
• Net Sales: $6.64 billion versus $6.63 billion estimate
• Diluted EPS: $1.19 versus $1.36 estimate
• Global paid subscriber additions: 8.51 million versus 6.03 million expected