Netflix has added 9 million subscribers since controversial password crackdown


Netflix reported blockbuster financial results in its first-quarter earnings report Thursday afternoon, as the streaming king returns to explosive subscriber growth, though some question how long the fruits of its password sharing crackdown will last.
Netflix Shares Jump On Strong Subscriber Report

Netflix is fresh off of its best ever quarterly subscriber growth, topping even 2020’s first quarter.

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Key Takeaways
  • Netflix’s $9.4 billion in first-quarter revenues and $5.28 profit per share were comfortably above consensus analyst estimates, with Netflix’s top and bottom line marks both the best in its history.
  • Perhaps most impressively, Netflix’s 9.3 million of paid net subscriber adds was about 70% above analyst forecasts, sending its global subscriber base to a record 270 million.
  • But Netflix expects the dough to come in slower next quarter, as the $9.5 billion of sales it guided for was just below consensus forecasts compiled by FactSet, and its $4.68 diluted earnings per share for the second-quarter would mark a notable decline from the just-completed quarter.
  • Shares of Netflix fell about 3% immediately after the earnings release, but remain up big for the year.
Big Number

2.53 million. That’s how many net U.S. and Canada subscribers Netflix gained during the first quarter. That’s lower than the prior quarter’s record 2.8 million adds, but shatter estimates of 1.1 million. Yet “there are increasingly fewer and fewer households in [the U.S. and Canada] yet to subscribe to the streamer,” warned MoffettNathanson analyst Michael Nathanson, noting the effects of the password-sharing crackdown launched last year was a “pull-forward of growth” that can’t be sustained “indefinitely.” Average analyst forecasts put U.S. and Canada growth to come in at about 3.3 million in 2024, far below last year’s 5.2 million. We’re “now past the biggest impacts from paid sharing,” prognosticated Rosenblatt analyst Barton Crockett.

Crucial Quote

Netflix stock faced a “tricky setup” heading into earnings, noted Deutsche Bank analyst Bryan Kraft., as the streamer’s share price is up more than 75% over the last six months.


Valuation metrics suggest Netflix’s return to profitability growth is heavily baked into its stock already, as its price-to-sales ratio (market capitalization divided by trailing 12-month revenues) and forward price-to-earnings ratio (share price divided by average projected profits per share over next 12 months) are both hovering at their highest levels since early 2022, sitting well above the industry average. But Netflix is the “indisputable winner of the streaming wars,” according to Nathanson, reflecting the strong investor sentiment as market dominance is always an attractive proposition.

Key Background

The last few years have been a wild ride for Netflix investors. Shares more than doubled from their early 2020 bottom to their November 2021 all-time high of over $700, before cratering to as low as $163 by mid-2022 as the market was aghast at the company’s first quarterly subscriber losses since 2011. But it’s been a steady uphill climb for Netflix over the past two years, with price stabilization coming as the firm tallied its best ever year of subscriber growth, revenue and profits in 2023, coinciding with the company’s push to limit account sharing and launch of a cheaper ad-supported tier.

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