Shares of Netflix Inc. NFLX experienced a 15% surge in premarket trading on Wednesday on the heels of the company announcing a 16% price hike for its standard streaming plan.
What Happened: Netflix’s shares saw an increase of $128.14 in the premarket, following a 1.35% rise at the close of the previous day, ending at $869.68.
The price increase, which took the ad-free standard plan from $15.49 to $17.99 per month, was announced in conjunction with Netflix’s impressive fourth-quarter earnings report.
The earnings report highlighted a 16% year-over-year revenue growth, reaching $10.25 billion, and a subscriber increase of 18.91 million. This surge in subscribers brought the total number of paid memberships to a staggering 301.63 million. The price increase also impacted the premium tier, now priced at $24.99, and the ad-supported option, which rose to $7.99.
Netflix’s robust performance, marked by a record operating income surpassing $10 billion for fiscal 2024, suggests a promising future for the company. Netflix anticipates its 2025 revenue to fall between $43.5 billion and $44.5 billion, indicating a 12-14% growth. This projection underscores Netflix’s relatively small current share of the estimated $650 billion market opportunity across its key regions.
The company’s strong performance, driven by popular shows like ‘Squid Game’ and its NFL content, has led to a significant increase in its subscriber base. The price hike, which is the largest in the company’s history, is a bold move that reflects Netflix’s confidence in its future growth and content offerings.
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