Netflix discusses possible increase in monthly fees | TV

When Netflix reported third-quarter results after the market closed on Thursday, consumers, investors and analysts wanted answers to two questions.

• Would the streaming giant increase its monthly fees?
• How much money does the company make from its advertising business?

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The first question brought a welcome answer to many subscribers and even investors: There is no need to raise prices now, at least in the US. The business gains enough customers.

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The second question suggests that the advertising platform does not yet generate any significant revenue that would need to be disclosed. Probably not even in 2025.

Netflix (NFLX) beat Wall Street estimates in the report with earnings of $5.40 per share, beating Wall Street’s consensus estimate of $5.12. Revenue was $9.82 billion, up 15% year-over-year.

Netflix now expects fourth-quarter revenue of $10.1 billion, up 14% year over year. Earnings are estimated at $4.23. Doubling the number from 2023.

In 2025, Netflix expects revenue of $43 billion to $44 billion, up 11% to 13% from its full-year 2024 forecast of $38.9 billion.

Investors cheered the results. While shares fell 2% to $687.65 in regular trading Thursday, they rose 5% to $722.35 in after-hours trading, not far from their record close of $730.29 on Oct. 10 removed.

At last premarket check on Friday, shares were 6.5% higher at $732.61.

Why the question of a fee increase keeps coming up

The question of an increase in monthly fees came up on the earnings call, which was led by co-CEOs Greg Peters and Ted Sarandos and chief financial officer Spencer Neumann.

Analysts had predicted there would be a fee increase, if only because competitors did so. The last Netflix series was released in October 2023.

However, Peters said an increase is not imminent. “For the most part, we try to think of our prices not in relation to the competition, but rather based on the added value we offer our members.” So we stick with plans that respond to customer interests.

What’s more important is that Netflix thinks about “optimizing long-term revenue” rather than average revenue per member, he added. In the USA, the price is currently still $6.99, he said.

Advertising: How Netflix wants to use it

When it comes to advertising, Netflix wants to offer different prices for different customers and thus maximize the number of customers.

More Wall Street Analysts:

The advertising business is growing and growing. It seems popular. In the countries where it is offered, 50% of new signups opt in to the ads.

The company is not yet large enough to provide a profit and loss statement. The eruption is unlikely to occur until 2026 at the earliest. This requires large upfront investments.

Concerns about U.S. customer engagement led the trio of Peters, Sarandos and Neumann to note that Netflix’s offerings are expanding – from movies and TV shows now to games and spectator sports.

There are two National Football League games on Christmas Day: the Kansas Chiefs against the Pittsburgh Steelers and the Baltimore Ravens against the Houston Texans.

A big year for the stock

Netflix shares are up 41% so far in 2024, up from nearly 29% for all of 2023. Its market cap is $295.1 billion.

The year-to-date return compares favorably to the Magnificent 7 group of megacap stocks.

It’s ahead of Apple (AAPL) plus 20.6%; Amazon.com (AMZN) plus 23.4%; Google parent alphabet (GOOGL) plus 16.6%; Microsoft (MSFT) plus 10.8% and Tesla (TSLA) Increase of 11.1%.

It trails Nvidia NVDA, up 176.5%, and Facebook parent company Meta Platforms (META) an increase of 63%.

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