Netflix blows away growth expectations, thanks to big bets, binging, and a serial killer

Netflix’s bright-and-shiny third-quarter earnings report sent its stock price skyrocketing late Tuesday, after the entertainment giant beat Wall Street expectations across the board and grew its subscriber count by more than double what it had projected earlier.

The streaming company reported revenue of $7.93 billion (compared to an expected $7.84 billion), and earnings per share of $3.10 (compared to an expected $2.13). But perhaps its starriest statistic was the addition of 2.41 million subscribers in the past quarter, compared to a projected 1.09 million subscribers.

Netflix’s stock soared over 14% after the closing bell, on the tailwinds of the report.

The good news follows a rough few quarters for Netflix. In the spring, it posted a net loss of subscribers for the first time in a decade, spooking investors and kicking off a monthslong stock free fall. In the summer, the company reported even more dismal numbers, with the subscriber loss widening from 200,000 to 1 million fewer Netflix watchers at the year’s halfway point. The one-two punch of back-to-back losses—a sharp recoil from the company’s pandemic gains, which took its stock price to a record high as recently as fall 2021—was so devastating that some began to speculate that it was ripe for acquisition, especially given the increasingly competitive landscape shaped by the streaming wars. By the time of the latest earnings release, Netflix stock had dropped 60% year-to-date.

And yet, it now seems to be clawing its way back. “After a challenging first half, we believe we’re on a path to reaccelerate growth,” the company wrote in a letter to shareholders. “The key is pleasing members. It’s why we’ve always focused on winning the competition for viewing every day. When our series and movies excite our members, they tell their friends, and then more people watch, join, and stay with us.”

Viewers’ appetites have seemed to crave darker and grimmer content lately. Netflix credits big hits like sci-fi phenom Stranger Things fourth season; secret agent action flick The Gray Man; and true-crime thriller Monster: The Jeffrey Dahmer Story—about the infamous serial killer—for leading the streaming company into a third-quarter upswing. It comes exactly a year after Netflix’s smash hit horror series Squid Game pushed the company’s stock into record territory.

According to Netflix, the majority of its renewed subscriber growth came from the Asia Pacific region. The company is optimistic that its new lower-priced, ad-supported membership tier, which is launching in November, will draw even more subscribers—including those who it may have alienated in recent years with its persistent price hikes and its crusade against password sharing.