Netflix Inc. has announced a substantial increase in customer additions, with 9.33 million new subscribers in the first quarter of 2024, marking a strong start to the year compared to previous years.
This figure nearly doubled the average projection of 4.84 million by analysts. The surge in subscribers is credited to an enticing lineup of original content and measures taken to address password sharing.
The company witnessed robust growth across global markets, particularly in the US and Canada. The influx of new subscribers also led to better-than-expected sales and earnings figures.
Despite this positive news, Netflix shares experienced a 4.6% decline to $582.70 at 6:03 p.m. New York time, following the announcement. However, earlier in the year, shares surged by 25% up to the close of regular trading on Thursday.
Anticipation was high for Netflix’s first quarter, with expectations of significant subscriber gains. In response to the increased interest, Netflix mentioned in its investor letter that subscriber growth would slow down in the upcoming period, while revenue is expected to rise by 16%.
Netflix announced its decision to discontinue reporting paid quarterly memberships and revenue per subscriber, starting from the first quarter of 2025. This move aims to shift focus towards traditional performance metrics such as sales and profit, while significant subscriber milestones will still be reported.
However, concerns have been raised about the cessation of quarterly subscription disclosures, especially considering Netflix’s remarkable subscriber growth over the past year. The company’s crackdown on unauthorized account sharing has contributed to its resurgence, estimated to have exceeded 100 million users. Despite initial concerns of customer backlash, Netflix successfully converted many unauthorized users into paying subscribers.
Netflix’s success in attracting new subscribers is attributed to its diverse content offerings, including popular series and reality shows.
With its extensive programming and global reach, Netflix commands approximately 8% of TV viewing in the US and maintains a strong position in major media markets worldwide.
The recent growth has propelled Netflix shares close to record highs, with a market value surpassing $260 billion. However, analysts remain cautious about the company’s valuation relative to its fundamentals. Nonetheless, Netflix continues to innovate, introducing a cheaper, ad-supported subscription tier and exploring live programming options.
