Netflix Stock Jumps After Hours on Earnings, Subscriptions Beat

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By Sam Boughedda

Netflix (NASDAQ:NFLX) shares rose over 14% in after-hours trading following the release of its third-quarter earnings, which saw it top earnings and revenue estimates, while subscriptions also beat expectations.

The streaming giant reported earnings per share of $3.10, $0.92 better than the analyst estimate of $2.18, while revenue for the quarter came in at $7.93 billion versus the consensus estimate of $7.85 billion, representing 6% year-over-year growth. However, the sequential decline in revenue was put down to foreign exchange headwinds.

Global streaming paid net additions were 2.4 million versus an expected 1 million.

Revenue, operating income and membership slightly exceeded the company's forecast during the quarter, with big hits across TV and film. Netflix said it launched some of its most-watched series and films of all time, including Monster: The Jeffrey Dahmer Story, Stranger Things S4, Extraordinary Attorney Woo, The Gray Man, and Purple Hearts.

After a challenging first half, we believe we're on a path to reaccelerate growth.

Looking ahead, Netflix sees fourth-quarter earnings of $0.36 per share, versus the consensus of $1.12, with revenue for the period expected to be $7.78 billion versus the consensus of $7.97 billion.

Netflix's revenue growth forecast is driven by its expectation for 4.5 million paid net adds compared to 8.3 million in the fourth quarter of last year.

"While we're very optimistic about our new advertising business, we don't expect a material contribution in Q4'22 as we're launching our Basic with Ads plan intra-quarter and anticipate growing our membership in that plan gradually over time," Netflix stated.

The company also said the strengthening of the US dollar will negatively impact its full-year 2022 revenue and operating income by $1 billion and $0.8 billion, respectively.

"Over the medium term, we believe we can adjust our pricing and cost structure for a stronger US dollar world. Our long-term goal remains unchanged - to sustain double-digit revenue growth, increase operating profit even faster (as we expand margins) and deliver growing positive free cash flow," stated Netflix.