Netflix stock spikes on earnings beat, positive outlook
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Netflix's stock was up more than 4% in after-hours trading Thursday, after it beat Wall Street expectations for its top and bottom lines in the first quarter and posted a positive revenue outlook for the second quarter.
Why it matters: The streaming giant's strong results suggest optimism amid an otherwise volatile economic landscape.
- Netflix's business is considered to be more insulated from new trade tariff policies and broader macroeconomic factors compared to its entertainment competitors as it's less reliant on revenue from advertising, hardware sales and in-person experiences, such as theme parks and movie theaters.
Zoom in: Netflix said its efforts to increase margins through its new ad tier and price increases are working.
- "The recent pricing adjustments we made in large markets (including US, UK and Argentina) have performed in line with our expectations," it said.
- "We remain on track to reach sufficient scale with our member base in all ads countries in 2025, and we expect to continue to grow our ads membership from this strong base in the future," it added.
By the numbers, via CNBC:
- Earnings per share: $6.61 vs $5.71 expected, according to LSEG
- Revenue: $10.54 billion vs $10.51 billion expected, according to LSEG
Between the lines: Netflix also said its co-founder Reed Hastings left his position as executive chairman to become the board's non-executive chair.
- The shift is part of a broader succession plan, the company said. Hastings stepped down as co-CEO of the streaming giant in 2023.
The big picture: Netflix is the most consistently profitable streamer amongst its competitive set. Despite ongoing competition, it continues to grow its business meaningfully.
- Thursday's report is the first time that Netflix did not post its subscriber figures, as it shifts focus to revenue and engagement figures.
