Shares of streaming giant Netflix (NFLX) gained in after-hours trading after the company reported earnings for its third quarter of Fiscal Year 2024. Earnings per share came in at $5.40, which beat analysts’ consensus estimate of $5.10 per share. Sales increased by 15% year-over-year, with revenue hitting $9.82 billion. This also beat analysts’ expectations of $9.77 billion.
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In addition, global streaming paid memberships increased to 282.72 million users, which equates to a 5.07 million user jump in the third quarter. Meanwhile, analysts had forecast 282.15 million users.
Interestingly, investors could have anticipated the solid year-over-year growth by simply looking at Netflix’s website traffic. As the image below shows, the number of visitors rose significantly during the most recent quarter. In fact, total estimated visits jumped 78.3% when compared to the same quarter of last year.
Netflix’s Guidance for Q4 2024
Looking forward, management has provided the following guidance for Q4 2024:
- Revenue growth of 15% versus analysts’ estimates of 14.2%
- Non-GAAP operating margin of 22%
- Paid net additions to be higher in Q4 than in Q3 2024
The growth in paid net additions will be driven by seasonality and a strong content slate. As we can see, the company’s outlook is better than expected, which, combined with the earnings and revenue beats, led to the after-hours move in the stock price.
Is NFLX Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NFLX stock based on 25 Buys, 10 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 99% rally in its share price over the past year, the average NFLX price target of $729.53 per share implies 5.73% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
