Netflix Earnings: Performance and Outlook Are Very Impressive, but Subscriber Growth Should Moderate

Netflix reported significant fourth-quarter subscriber additions with strength across all regions, and average revenue per member was up after several quarters of decline, resulting in significant sales growth acceleration. We see further tailwinds to ARM over the next few years but believe subscriber growth will slow. We’re raising our fair value estimate to $425 from $410 after incorporating the results and management’s 2024 outlook, but we believe the stock has gotten ahead of itself even as we expect Netflix to remain dominant.