Netflix jumps 6% after Reed Hastings retires and subscriber count rises

Netflix jumps 6% after Reed Hastings retires and subscriber count rises

  • Shares of Netflix rose 6% before the opening bell on Friday after the company released its fourth-quarter results.
  • The streaming giant missed its profit targets but added 7.7 million subscribers above target.
  • Additionally, Co-CEO Reed Hastings announced that he would be leaving his current role.

Netflix’s stock price rose on Friday after the company’s fourth-quarter results showed it had added millions more subscribers than Wall Street expected.

Shares were up nearly 6% in premarket trading, hitting $334.33 before the opening bell. The streaming giant’s latest earnings report, released Thursday, showed it added 7.66 million subscribers last quarter, beating StreetAccount’s forecast of 4.57 million.

Those numbers helped investors look past a gloomy economic outlook and Netflix’s disappointing fourth-quarter earnings. The company posted earnings per share of 12 cents, well below the 45 cents analysts were expecting, according to Refinitiv.

“As Wall Street sinks under the weight of recession fears and Federal Reserve jitters, Netflix’s big jump in subscriber numbers has injected some much-needed optimism into the mix,” said Sophie Lund-Yates, analyst by Hargreaves Lansdown.

The Addams Family spin-off “Wednesday,” the murder mystery “Glass Onion,” and the royal family tell-all documentary “Harry and Meghan” helped draw subscribers to the Netflix streaming service for the last three months of 2022. the company said Thursday.

The firm also announced that co-CEO Reed Hastings would step down to become CEO of Netflix. COO Greg Peters has been promoted to co-CEO and will work alongside Ted Sarandos.

Hastings co-founded Netflix in 1997 and oversaw its transition from DVD delivery service to streaming giant and once Wall Street darling.

But his departure comes with Netflix’s stock price locked in a period of long-term decline. Despite Thursday’s rally, shares are still down 38% since early 2022.

High inflation, rising interest rates and fears of a recession weighed on markets at the time, but Netflix also suffered its first loss of subscribers during the first quarter of 2022.

“Investors couldn’t wait to get rid of Reed Hastings as joint head of Netflix judging by the stock price reaction to the news of his resignation,” said AJ Bell chief investment officer Russ Mold. “A 7% increase in after-hours trading is the market’s way of saying it’s time for someone new to help steer the ship.”

“While Hastings remains as CEO, the market is more focused on the day-to-day running of the business and the decisions required to inject more life into the company and how that might translate into share price growth,” he added.

Read more: Reed Hastings resigns as co-CEO of Netflix

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