Netflix(NFLX) posts an 11.4% revenue increase for Q3, fueled by new content and subscriber growth

Netflix shares surged 5.2% in premarket trading on Friday after the streaming giant exceeded Wall Street’s expectations for new subscriber additions by over 1 million, and forecast even stronger sign-up numbers for the December quarter.

On Thursday, Netflix reported 5.1 million new subscribers for Q3, with more than 50% of sign-ups in regions where its ad-supported service is available coming from that tier.

“Netflix is something people can’t live without, and these results highlight its enduring appeal,” said Dan Coatsworth, investment analyst at AJ Bell.

The platform also projected higher customer growth in the December quarter, typically a strong period due to the holidays. The highly anticipated second season of the hit Korean drama Squid Game is slated for release in late December, further boosting expectations.

Shares of rivals Walt Disney and Warner Bros Discovery saw marginal gains in response.

"Legacy media competitors are losing money rapidly, giving Netflix a distinct advantage in content creation as others struggle to allocate more capital," noted Matt Britzman, senior equity analyst at Hargreaves Lansdown. He added that ad revenue is expected to grow in 2025, and ongoing price increases in select markets could further enhance profitability by "squeezing more" from existing subscribers.

At least eight analysts raised their price targets for Netflix following the results, bringing the median target to $750, up from $706.38, according to LSEG data.

While subscriber growth surpassed forecasts, it fell short of the 8.76 million new users gained during the same period last year. As Netflix’s subscriber growth begins to slow, the company has been shifting its focus towards other metrics like revenue growth and profit margins.

Year-to-date, Netflix’s stock has climbed about 41.2%, while Disney has risen 6.9%, and Warner Bros Discovery has dropped roughly 31%.