Shares of Netflix Inc (NASDAQ:NFLX) rocketed 15% higher in aftermarket trading Tuesday after the firm reported third-quarter results that soundly surpassed analysts’ expectations.
The streaming giant posted revenue of more than $7.9 billion, up nearly 6% from $7.2 billion in the third quarter of 2021 and ahead of an expected roughly $7.84 billion. Earnings per share were $3.10, compared to $3.19 a year ago but well ahead of Refinitv’s estimate of $2.13.
Perhaps most significantly, Netflix added 2.4 million global paid subscribers in the period, compared to Street estimates of 1.09 million.
After the closing bell, shares of Netflix traded nearly 15% higher at $276.01.
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“After a challenging first half, we believe we’re on a path to reaccelerate growth,” the company said in a letter to shareholders.
“Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard — we estimate they are all losing money, with combined 2022 operating losses well over $10 billion, vs. Netflix's $5 to $6 billion annual operating profit,” the company added.
Looking ahead, Netflix said its new $6.99 ad-supported membership tier will launch in November. In terms of guidance, the company is forecasting fourth-quarter revenue of $7.8 billion compared to $7.7 million in the same period of 2021, an estimate the company attributes to the strengthening US dollar relative to other currencies.
The ad-supported tier is not expected to make a significant impact in the fourth quarter figures, the company said.
“While we’re very optimistic about our new advertising business, we don’t expect a material contribution in Q422 as we’re launching our basic with ads plan intra-quarter and anticipate growing our membership in that plan gradually over time,” the company said.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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