Netflix Shares Set A Record After Customer Growth Again Exceeds Expectations

Netflix announced price increases in several markets (photo: dock.pexs)

JAKARTA - Netflix shares jumped 15% and hit record highs on Wednesday January 22, after the streaming giant managed to add 18.9 million new subscribers in the holiday quarter. Netflix's biggest investment in sports, which gives investors confidence that the company still has significant growth potential.

On Tuesday, January 21, Netflix also announced price increases in several markets, including the United States, as a step to increase revenue. This strategy signifies the company's shift in focus from customer growth to other performance metrics such as sales.

Laurent Yoon, analyst from Bernstein, even mentioned that Netflix's achievements looked like a "tiptic error" as the company surpassed all expectations. "Netflix is again challenging all possibilities, recording customer growth that far outperforms target numbers that even make no sense at all," Yoon said, quoted by VOI from Reuters.

The market capitalization value of Netflix, which was previously around US$370 billion (Rp6 quadrillion), is expected to increase by nearly US$56 billion (Rp909.7 trillion) based on stock movements before the opening of the market. With this achievement, Netflix now has a larger valuation than the combined value of Disney, Comcast, Paramount, and Warner Bros Discovery.

Netflix's share price increase by more than 80% last year was largely triggered by the company's expansion into live sports content. Some flagship programs include boxing matches between Jake Paul and Mike Tyson, as well as the debut of Beyonce's popular National Football League (NFL) match on Christmas which also featured a part-time show by Beyonce.

Paul-Tyson's boxing match on November 15 became the most streaming sporting event in history, as well as recorded the highest number of new registrations for Netflix since the data began to be monitored by Antenna in 2019. Other strong content in the quarter included the second season of "Squid Game" and hit streaming film "Carry-On."

Now, Netflix's global customer base has surpassed 300 million, giving a huge advantage in streaming service competition while increasing the company's bargaining power with marketing companies in an effort to grow ad-supported businesses.

Dan Coatsworth, analyst at AJ Bell, said that Netflix is likely to start bidding on other major sports broadcasting rights. "Sport broadcasting rights can be very expensive, but Netflix seems to choose the perfect special events to attract the attention of advertisers who want to reach big audiences," he said. Currently, Netflix has secured broadcast rights for the 2027 and 2031 FIFA Women's World Cups in the US.

However, this impressive report also hides one concern: the surge in customer numbers is not accompanied by an increase in revenue comparable. Sales only rose 16% and about 100 million US dollars (Rp1.6 trillion) above expectations, while customer growth was almost double the expected figure.

According to Ben Barringer, technology analyst at Quilter Cheviot, this is due to the growth of customers originating from countries with lower average earnings per user (ARPU) as well as the large number of registrations for advertising-supported packages.

However, Barringer is optimistic that the price increases that have been announced and which will take effect throughout 2025 will help increase revenue.

This year, Netflix is expected to feature new seasons from popular series such as "Stranger Things" and "Wednesday." In addition, the company is also starting to broadcast "WWE RAW."

At least 20 analysts have raised Netflix's share price target, with a median target of up to 970 US dollars (Rp15.7 million) according to LSEG data. The price ratio to revenue for the next 12 months for Netflix shares is at 35.43, well above Walt Disney which is only 19.19.

With the innovative strategy and expansion into the sport segment, Netflix continues to show that they are the undisputed leaders in the streaming industry.