Netflix (NFLX.O) saw its shares rise over 6% on Friday, fueled by investor confidence in its strong content lineup, which is expected to sustain subscriber growth despite a decrease in momentum from its password-sharing crackdown.
The streaming giant, often regarded as a leader in Hollywood’s streaming wars, is projected to add approximately $18 billion to its market capitalization of about $295 billion based on premarket trading.
In its latest report, Netflix exceeded estimates for quarterly subscriber additions by over 1 million and forecasted increased sign-ups for the final quarter of the year, coinciding with the return of the popular Korean drama “Squid Game.”
Additionally, Netflix’s profits and revenues surpassed expectations, signaling a shift in focus from subscriber growth to overall financial performance. Some analysts predict a slowdown in new sign-ups following the successful implementation of password-sharing restrictions. The company added 5.1 million users in the third quarter, down from 8.76 million in the same period last year.
Morningstar analyst Matthew Dolgin noted, “The third quarter reflected the expected slowdown in subscriber growth, but Netflix has other avenues to enhance its financial performance.”
Part of this strategy includes price increases; after recent hikes in regions like Japan, the Middle East, and Europe, Netflix is also raising prices in Italy and Spain, with potential U.S. increases anticipated next year. Bernstein analysts pointed out that while no price changes were announced, there is potential for hikes linked to stronger user engagement.
The ad-supported tier showed promising growth, accounting for over 50% of sign-ups in available regions during the third quarter, although Netflix doesn’t expect advertising to be a major growth driver until 2026.
Following these results, at least eight analysts raised their price targets for Netflix, with the median target climbing from $706.38 to $750, according to data from LSEG.