Ajit Karn
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Late Thursday, the streaming video leader announced that it ended the year with 230.75 million users globally, an increase of 7.66 million over the prior quarter.
FactSet’s survey of analysts forecast that Netflix will gain 4.57 million users.
The Los Gatos, California, firm fell short of analysts’ fourth-quarter revenue and profit projections.
Over the same time period, Netflix made 12 cents per share in profit on $7.85 billion in sales.
Despite missing the consensus estimate of 55 cents a share on revenues of $7.86 billion, the company reported a profit.
The company earned $1.33 per share on $7.71 billion in revenue in the same period a year ago.
Its profit objective for the current quarter fell short of expectations, while its sales forecast came in just slightly ahead of expectations.
Despite Downbeat Report, Netflix Stock Rises
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Netflix shares rose 6.3% in early trading Wednesday, reaching $335.51.
The shares of Netflix declined 3.2% on Thursday, ending the regular trading day at a price of $315.78.
Netflix forecasts a first-quarter profit of $2.82 per share on revenue of $8.17 billion.
Profit per share of $2.98 on revenue of $8.15 billion was the consensus estimate for the March quarter among financial experts.
On $7.87 billion in revenue, Netflix made $3.53 per share in the same period a year ago.
Executives from Netflix have stated that they are focused on profitability despite the fact that their competitors are losing billions of dollars attempting to catch up.
In a letter to shareholders, Netflix’s management stated, “We believe we have a clear route to reaccelerate our revenue growth: continuing to improve all areas of Netflix, releasing paid sharing, and increasing our advertisements offering.”
“As usual, our top priorities are the happiness of our members and the steady growth of our bottom line,”
“Wednesday,” “Harry & Meghan,” “Troll,” and “Glass Onion” were among Netflix’s most watched originals in the fourth quarter.
There Has Been a Change in Leadership
Meanwhile, Netflix’s co-founder and co-CEO Reed Hastings has stepped down to take on the role of executive chairman, bringing an end to a succession process.
Co-CEO Ted Sarandos was joined by Chief Operating Officer Greg Peters.
Hastings, according to Pivotal Research Group analyst Jeffrey Wlodarczak, will try to sell Netflix after the 2025 U.S. presidential election.
In a note to clients, he suggested that Microsoft (MSFT) is the most likely suitor for acquiring Netflix.
Wlodarczak recommends buying Netflix shares and has a $400 price objective.
Enhanced Free Cash Flow
The free cash flow creation by Netflix was well received by Wall Street.
Free cash flow was $1.6 billion in 2022, and the corporation projects at least $3 billion.
The consensus forecast for free cash flow this year was $2.4 billion.
Jessica Reif Ehrlich, an analyst at BofA Securities, praised Netflix’s “superb” free cash flow forecast.
Her price target for Netflix shares is $410.
Netflix has also announced that it will resume buying back its own stock in 2023.
IBD Stock Checkup ranks Netflix stock top in the Leisure-Movies & Related industry group, where a total of twenty-one stocks are included.
There is an 89 on the IBD Composite Rating scale.
Marketwatch:
Netflix: Shares gained nearly 7% premarket.
Alphabet:stock rose 3.4% in premarket.
Wayfair: stock added 7.5% premarket.
Eli Lilly: shares stood 1.8% lower premarket.
Playtika: Rovio shares surged 34%.
SLB: stock rose 1.3% premarket.#Trending #StocksToTrade pic.twitter.com/AAPBVB3HNG— The_Journalbiz (@the_journalbiz) January 20, 2023
