Netflix soars as earnings highlight dominance in ‘streaming wars’

Netflix soared 11% on Wednesday as its blowout subscriber growth cemented investor confidence the firm has won the streaming wars with its password-sharing crackdown and a strong content slate.

The company said on Tuesday 13.1 million signed up for its service in the fourth quarter, marking its best growth since the start of the pandemic and handily beating estimates of 8.97 million subscribers.

The streaming pioneer’s shares were trading at a more than two-year high. The company was set to increase its market value by more than $20 billion, if the gains from early trading hold.

“Netflix has already won the streaming wars and this type of strong result/guidance, especially relative to its streaming peers, is what winning looks like,” said Pivotal Research Group analyst Jeffrey Wlodarczak.

Wlodarczak raised his price target on the stock to a Wall Street high of $700. Overall, more than half of the 44 analysts covering Netflix (NFLX.O), opens new tab raised their targets, pushing the median view to $554.

The company’s stock commands a premium relative to rivals. It trades at nearly 30 times its 12-month forward earnings, compared with Walt Disney Co’s (DIS.N), opens new tab 20.41, according to LSEG data.

Some analysts believe the valuation could be justified as the ongoing push for profitability at other streaming firms will force them to license more titles to Netflix, which may help Netflix drive up subscriber growth and average revenue per user. Reuters