Netflix Shares Jump as It Meets Expectations for Subscriber Growth

The streaming service’s 74.76 million total members barely beat its guidance of 74.32 million

Netflix shares jumped Tuesday after it just barely met expectations for fourth-quarter signups, bringing its total membership to 74.76 million.

The results follow the company’s sweeping rollout in 130 countries this month, effectively making it a global Internet television network everywhere but China. The international expansion is key to the company’s growth strategy, since US signups have begun to slow.

Shares surged 9 percent to $117.60 in after-hours trading, after they ended the session more than 3 percent higher ahead of the results. Netflix stock soared last year, more than doubling and turning in the single strongest performance in the S&P500 Index. Many of its traditional television rivals struggled with investor questions about whether online alternatives were beginning to erode TV demand.

Netflix has been rubbing salt in the networks’  wounds with recent statements.

“The growth of Netflix has created some anxiety among TV networks and calls to be fearful,” CEO Reed Hastings and financial chief David Wells said in a letter to shareholders. “Or, at the other extreme, an NBC executive recently said Internet TV is overblown and that linear TV is ‘TV like God intended.'”

“Our investors are not as sure of God’s intentions for TV, and instead think that Internet TV is a fundamentally better entertainment experience that will gain share for many years,” they added.

U.S. subscribers rose by 1.56 million to 44.74 million. That’s just shy of the 44.83 million the company predicted in October. But overseas subscribers climbed by 4.04 million to 30.02 million, compared with guidance of 29.49 million.

In the letter to shareholders, the executives said their expectations in China, where Netflix is not legally available, were “modest and long-term.”

“In the last remaining major market, China, we have work and uncertainty ahead. We are building relationships, understanding the market, and seeking the conditions we require to provide our service to entertainment lovers there,” they wrote.

Overall for the three-month period that ended in December, Netflix reported a profit of $43.2 million, or 10 cents a share, compared with $83.7 million, or 19 cents a share, a year earlier. Revenue rose 4.9 percent to $1.823 billion.

Analysts on average expected per-share profit of 2 cents on $1.825 billion.

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