200 Million Netflix Subscribers Could Boost Stock

January 21, 2021
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Streaming company Netflix Inc. (NASDAQ: NFLX) has improved its position as one of the most powerful companies in the entertainment industry, announcing this week that it has passed the 200 million subscriber mark.

Investors that have been skeptical about the company’s ability to compete in an increasingly crowded streaming market will now find it difficult to ignore this rapidly growing company.

Netflix Beats Expectations in the Fourth Quarter

There has been plenty of criticism for Netflix over the years. The company has followed a strategy of heavy investment, debt load, and cash spending over the last decade. The goal has always been to win subscribers through content, and this approach has been validated with the latest fiscal results.

The company posted revenue of $6.64 billion from the fourth quarter, compared to $5.47 billion a year ago. Earnings were $1.19 per share from a net income of $542 million.

The financials are sound, but it’s the subscriber numbers that are much more exciting. The company added 8.5 million new subscribers in the quarter, bringing its total above 200 million for the first time. It has now extended its lead as the largest streaming provider in the world.

Full-year subscriber figures are even more impressive. The company added 37 million new subscribers last year, an increase of 31% compared to 2019.

Most of the company’s growth came from international markets. It grew its subscriber base by 67% in the Asia Pacific region and 41% in Europe, Africa, and the Middle East.

Even in the smaller and heavily saturated North American market, the company added 860,000 new subscribers, compared to 550,000 this time last year.

New subscribers come even as the company has increased the price of its streaming service. It is now making more money per subscriber than ever before.

Is This the Most Viable Streaming Stock?

Those who criticized Netflix’s growth strategy will now need to reassess their positions. Content and the power of the Netflix brand have continued to drive the company forward.

The stock has underperformed in the year to date, but the subscriber growth announced this week could change this fact. The recorded analyst average estimate before the earnings announcement was $567.77, suggesting a mild upside. However, the latest news could push revisions closer to the high-end target of $700.

Netflix is still the leading streaming company with one of the most powerful entertainment stocks for long-term growth.

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