Netflix Q4 Sees User Growth Skyrocket, Surpassing Forecasts

Streaming giant Netflix (NFLX.Q) wrapped up a year of tremendous growth by increasing the number of users by 8.5 million during the fourth quarter. 

Although the firm failed to reach the mark in terms of its earnings per share, it managed to meet and exceed its paid subscriber growth rate. 

Here’s a snapshot of how the company performed in the last quarter compared to what analysts had predicted:

Revenue: $6.64 billion versus the predicted $6.63 billion

Earnings per share: $1.19 versus the predicted $1.36

Additions in the global paid subscriptions: 8.51 million versus the predicted 6.03 million

Following the quarterly earnings report, the company’s shares jumped 8% by the end of the trading session on Tuesday. 

When making the announcement, Netflix reported that it gained 37 million paid memberships in the course of 2020. This contributed significantly to the 24% increase in its annual revenue, which totalled to $25 billion.

The video-sharing platform has been a prime beneficiary of lockdowns, which have battered the global entertainment industry. 

Within the first nine months of 2020, the company had added 28.1 million paid subscribers, an increase of 0.3 million compared to the same period in 2019. 

However, the sharp rise in its subscription growth rate slowed down in the third quarter as the company only managed to add 2.2 million users. Analysts had estimated that it would add up to 3.3 million users in Q3.

Although Netflix continued to gain more subscribers by the fourth quarter, the investor report revealed that its shares dropped by a small margin. 

Its stock price decreased by 4.5% between Q3 and Q4 earnings reports. Meanwhile S&P jumped 9.4% within the same duration. 

Still, analysts have high hopes that the firm will continue with its solid performance in 2021. Eric Sheridan, a Wall Street analyst at UBS said, “looking forward we remain positive on the long term prospects for streaming media and NFLX’s respective role in it.”

Yung Kim, who is also a Wall Street analyst at Pipe Sandler, shared similar sentiments as he remarked, “as consumers engage in less leisure travel and out-of-home entertainment, we believe Netflix could continue to benefit from a bump in sub ads as well as mitigated churn.”

One of the reasons behind Netflix’s increasing popularity entails its stellar content. The platform showcases some of the best films and tv series. 

“The Midnight Sky”, which features and is directed by George Clooney, attracted a record viewership of 72 million member households within the first 28 days of its release, according to Netflix.

Christmas-themed “Holidate” and the latest season of “The Crown” shared similar success stories, with 62 million and 100+ million households choosing to watch these shows, respectively.

However, Netflix acknowledged that it faces competition from previous and upcoming video-streaming platforms. 

Apart from traditional competitors like Amazon’s (AMZN.Q) Prime Video and Hulu, the company now has to contend with Disney+ (DIS.NYSE), Peacock and HBO Max. 

But Netflix is still ahead of the curve. For instance, let’s compare it to Disney+, which was started a little over a year ago. The latest statistics show that the platform has 86.8 million subscribers. 

To safeguard its position in the entertainment space, Netflix intends to reveal a ton of new content in 2021. Just recently, it said that it would unveil a new film every other week.

One of the most notable releases is that of “Malcom and Marie”, which is already attracting popularity and criticism in equal proportions. 

But the company’s rivals also plan to put their best foot forward. Disney+, for instance, has a number of movies lined up for release, some of which are from the renowned Marvel and “Star Wars” franchises.