Netflix Stock Hits New Heights After Spectacular Earnings Report

Netflix stock flirted with the $1,000 mark Wednesday, hitting all-time highs in the wake of the company’s spectacular earnings report.

In detailing its fourth-quarter financials Tuesday, Netflix said it added a company-record 18.9 million subscribers during the period to reach 301.6 million worldwide. It also exceeded forecasts for revenue and earnings per share.

Investors piled into the stock on the news, sending shares up more than 10% to as high as $999 before they settled closer to $960.

It’s a dramatic turnaround from just two-and-a-half years ago, when shares slipped below $180 after the company reported subscriber declines and appeared to be vulnerable to new streaming competitors. Since then, the company has trimmed costs and added a cheaper advertising tier as well as implementing paid password sharing. Those moves, along with an appealing programming lineup including live sports, has helped the company power through adversity to become the undisputed streaming champion.

Pivotal Research Group’s Jeffrey Wlodarczak upped his 12-month price target for Netflix to $1,250 and called the quarterly report a “blowout.” He pointed to opportunities to acquire assets (even floating scenarios like Sony Pictures Entertainment or Formula 1) and noted the strength of the company’s average revenue per user or ARPU.

“The key for Netflix going forward is to press their advantages and keep the subscriber/ARPU flywheel going,” he wrote in a note to clients, “because the larger they get the more leverage they have over their peers/content creators, the better their product gets (allowing them to drive subscriber/ARPU growth), the more cash they have to spend on compelling content and the bigger the moat grows around their core business model.”

Michael Morris of Guggenheim Securities also upped his target, to $1,100 from $950.

“As good as it gets?” he wrote in a client note. “We don’t think so.”

Along with strong viewership in December thanks to NFL football, Squid Game Season 2 and action thriller movie Carry-On, Morris said he has come to view “earlier stage initiatives—led by advertising sales, live content including sports and events, and video game offerings—as incremental contributors to sustained growth in the coming years.”