Netflix Stock Soars on Strong Q4 2023 Results, FCF Estimates Point to Higher Value

Shares of subscription-streaming service Netflix soared to two-year highs after the company reported its completed financial results for Q4 2023. The company witnessed a significant surge in growth and higher-than-expected profits, leading to a 12% increase in Netflix stock.

In 2022, Netflix introduced a subscription tier supported by advertising, and in 2023, the company implemented measures to crack down on password sharing. These strategic moves seem to have effectively stimulated growth, as Netflix’s paid memberships reached 260 million by the end of 2023, recording an increase of almost 30 million from the previous year.

Thanks to a larger membership base and improved operational discipline, Netflix experienced a substantial rise in profits. The company’s full-year revenue for 2023 grew by 21%, compared to an 18% margin in 2022. Moreover, free cash flow (FCF) surged from $1.6 billion in 2022 to an impressive $6.9 billion in 2023.

The positive financial results and promising forecast for 2024 have generated excitement among investors. Netflix expects its first-quarter revenue to increase by over 13% year over year, marking its strongest quarterly growth rate since Q4 2021. Additionally, the company forecasts a 24% operating margin for the year, which would be its highest on a trailing-12-month basis.

Given Netflix’s ability to rebound from a period of slower growth and achieve renewed success, it is no wonder that the stock is reaching new highs. The company’s profitability will also enable it to invest in further growth opportunities, indicating that the story may not be over yet.