Netflix Inc At the end of 2020, the first 200 million streaming subscribers were reached as registrations rose again despite higher prices in the US and Canada

On Tuesday afternoon, Netflix
reports 85 million net new customers in the fourth quarter, a dramatic increase from Jan. Quarter 2 million were reported in the previous quarter, well ahead of Netflix and analyst estimates Netflix attracted 259 million new subscribers in the first half as COVID-19 pandemic-related orders spread worldwide, translating into annual net income of 366 million subscribers out of 203 a total of 7 million

That feat resulted in Netflix sales rising to $ 25 billion for the first time and profit increasing 48% for the full year. Executives gave investors a special treat after the big wins, telling them they were off assume the money generated by the business should reliably fund ongoing operations after years of putting massive debt into funding their growing library of video content

The news sent Netflix shares up more than 10% after close of trading on Tuesday, despite lower-than-expected gains after rising sharply in early 2020, Netflix shares settled and fell in the second half of the year in the last three months by more than 5%

The # 1 streaming service reported net income of $ 542 million, or $ 119 a share, for the fourth quarter, compared to net income of $ 130 per share in the year-ago quarter. Revenue improved to $ 6.664 billion from 5 $ 47 billion a year ago analysts surveyed by FactSet expected adjusted profit of $ 136 representing $ 6 billion in revenue

After Netflix posted modest gains in the third quarter, there were fears that demand for Netflix would cool given increased competition and content from Walt Disney Co.
Disney and Hulu, Apple Inc’S
Apple TV, AT&T Inc’S
HBO Max, Amazoncom Inc.’S
Prime Video and Comcast Corp.’S

“The huge growth in streaming entertainment has led older competitors like Disney, WarnerMedia and Discovery to compete with us in new ways that we have been expecting for many years,” the executives wrote in a letter to shareholders on Tuesday “This is in part why we have moved so quickly to expand and further strengthen our original content library in a variety of genres and nations”

In a 40-minute video interview following the results, Reed Hastings, co-CEO of Netflix, admitted that it was “super impressive what Disney has done”

“It shows that members are willing to pay more for content,” said Hastings. “It drives us to increase our membership and content, and it’s good for the consumer”

The Silicon Valley company plans to release more than 70 films this year This reflects what Co-CEO Ted Sarandos calls the diverse tastes and appetites of its members

Netflix used massive debt to fund this content creation, but executives said in the letter that “we believe we are very close to being sustainable [free cash flow] positive,” and summarized a piece of text throughout the letter

“We believe that we no longer have to raise external financing for our daily operations,” says the bold text in the letter

During the video interview, Netflix CFO Spencer Neumann declined to provide a full-year forecast, citing “so much business uncertainty” in the era of COVID, but he was quick to add that the pandemic is a major shift from linear viewing to streaming has accelerated, particularly in the USAS, Asia and Latin America “It’s difficult to project the next 90 days, let alone the next 12 months,” he said

Netflix started raising the price of popular streaming tiers in the US and Canada towards the end of last year to counter slower subscriber growth, executives predict Netflix will add 6 million net new subscribers in the first quarter of the year That would be a massive drop from more than 15 million who signed up as COVID-19 around the world in the first quarter of 2020

Neumann said the price hike again enabled him to invest in content to “add diversity and value”

While executives did not come up with annual guidelines for adding subscriptions, they said operating margin growth would slow, a signal that they are unlikely to add as many subscribers in 2021 after gross margin rose 5 percentage points in 2020 has risen to 18%, they expect a more modest growth of around 2 percentage points to 20% this year

“We intend to further increase our operating margin every year over a period of a few years by an average of 3 percentage points per year, but we expect a certain lumpiness,” write the executives. “We will be a bit over a few years (as in Year 2020), a few years below (as in 2021)”

Netflix stocks are up 48% over the past 12 months, while the S&P 500 index
has increased by 14%

The 10 investment professionals at Barron’s Roundtable see the US. Economy Grows 4% to 6% This Year As Covid Defeats High Valuations Could Limit Market Profits But Plus, 9 Picks From Bill Priest and Meryl Witmer

Jon Swartz is a Senior Reporter at MarketWatch in San Francisco, covering many of the largest tech companies including Netflix, Facebook, and Google Jon has been in technology for more than 20 years, previously with Barron’s and USA Today, following him on Twitter @jswartz

Jeremy Owens is MarketWatch’s technology editor and office manager in San Francisco. You can follow him on Twitter @ jowens510

Netflix Stock

World News – CA – Netflix surpasses 200 million subscribers with year-end rebound, shares jump 10%