Thursday saw a 16% increase in Netflix shares in response to a positive quarterly earnings release.
The massive streaming service announced a number of successes, one of which was a 70% increase in its new ad-supported subscription tier.
In terms of total members, Netflix added 8.76 million during the third quarter, considerably more than the 5.49 million predicted by Wall Street. It’s the largest increase in subscribers since COVID-19 stay-at-home limits pushed new sign-ups in the second quarter of 2020.
After recording its first net subscriber decrease in more than ten years in April 2022, which raised concerns about the market’s saturation, Netflix continued to expand in Wednesday’s report, which was welcomed by a number of analysts.
Morgan Stanley analysts increased their price target for the company to $475 and upgraded it to overweight status.
“We believe Netflix will deliver the objectives it set out a year ago, accelerate revenue growth back to double digits and expand margins,” Morgan Stanley said in a Thursday analyst note.
According to a report published on Thursday by Truist analyst Matthew Thornton, the crackdown on password sharing may keep driving membership growth well into the upcoming year. Additionally, the company increased its price objective for Netflix from $430 to $465 and elevated it to a buy rating.
“We upgrade to Buy with our thesis predicated on ongoing password sharing benefits (into 2024), advertising ramp (long-term), and share buybacks ($10b added), with top 3 tent-poles by 2025 (Squid Game, Wednesday, Stranger Things), with video games a free call option, and with optional growth levers available to NFLX,” Thornton said in the note.