Netflix Stock Hits Record Highs After Crushing Earnings Expectations

Shares of Netflix (NASDAQ: NFLX) soared to fresh all-time highs on Friday, boosted by a strong earnings report. The media streaming pioneer's stock had gained by 10.7% by 11:10 a.m. ET, adding up to a gain of 120% in 52 weeks.

Sales and earnings breezed past expectations

Netflix's top-line revenue rose 15% year over year in the third quarter, landing at $9.83 billion. That's slightly ahead of a 14.4% increase in global memberships over the same period, including a net increase of 5.1 million accounts in the third quarter. Earnings stopped at $5.40 per diluted share, 45% above the year-ago reading.

Your average analyst would have settled for earnings near $5.16 per share on sales in the neighborhood of $9.78 billion. Netflix also exceeded management's guidance for all six of the financial targets given in the second-quarter report, and guidance figures for the next quarter came in above current Street expectations.

The road ahead looks clear

The company achieved these analyst-stumping results despite some macroeconomic headwinds. Sales were up 21% year over year on a currency-adjusted basis, and average revenue per member (ARM) rose 5% after the same foreign currency adjustment.

The first half of 2024 was hampered by last year's writer and actor strikes, delaying many film and series premieres to the second half or 2025. Netflix is still dealing with these schedule adjustments, but many belated premieres are coming up in the fourth quarter.

Netflix is delivering on its stated targets, optimizing the business plan for revenue growth and expanded operating margin. These trends should continue in the fourth quarter and beyond as Netflix takes advantage of a more robust macroeconomic environment and continued cord-cutting trends.

Netflix's stock is trading at record highs today, and for all the right reasons.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,121!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,917!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $370,844!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 14, 2024

Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.