Netflix is quickly approaching 150 million subscribers. Netflix said Thursday that it added nearly 9 million new paying subscribers during the final three months of 2018, beating its own expectations of 7.6 million new subscribers. Netflix added 8.8 million paid subscribers in the last quarter, up 34% compared with the year-earlier period, as the streaming media company launched hits including the movies Bird Box and Roma and the series You, The Haunting of Hill House and Sex Education. Expectations were high for the company heading into the holiday quarter report. The stock had soared roughly 50% from its low hit in late December amid a broader market sell-off. Netflix stock was down about 3% in after-hours trading Thursday following the report.
The company’s fourth-quarter earnings were broadly in line with analyst estimates and came after the streaming media giant announced a subscription price hike. However, its stock dropped 2.8% immediately after the results were announced on fears that its spending on content and willingness to take on new debt were not justified by the latest figures. The company is guiding toward lower-than-expected results for the first quarter of 2019. Netflix expects earnings per share of 56 cents on revenue of $4.49 billion, compared with Wall Street consensus estimates of 82 cents and $4.61 billion.
Netflix added that their new original movie, Bird Box, was likely to be viewed in over 80 million households. The company also highlighted that they are currently competing more with video games like Fortnite than with television companies such as HBO for user screen time. “For 20 years we’ve been trying to please our members,” said said Netflix Chief Executive Reed Hastings, on a conference call to discuss the company’s results. “Our main goal is to make the best content.” With its latest subscriber additions, Netflix ended 2018 with a total of 139.3 million paid memberships globally. However, Netflix shares fell by 3.4 percent, to $341.80, in after-hours trading Thursday.
Analysts estimate that Netflix spent more than $13bn on movies and shows this year. Netflix said its spending is likely to increase. “Our multi-year plan is to keep significantly growing our content while increasing our revenue faster to expand our operating margins,” Netflix said in a shareholder letter tied to the earnings report. “Our growth is based on how good our experience is,” it said. Netflix estimates that Bird Box, its buzzy film starring Sandra Bullock, was viewed by more than 80 million members in its first four weeks. The company also said that “You,” a new thriller TV series, was watched by more than 40 million members in its first four weeks. The earnings report did not indicate whether the viewership numbers have been vetted by a third party.