Netflix hit a new all-time high on Wall Street on Wednesday, surging 16.85% to close the day at $586.34 per share. The stock spike came one day after the streaming giant reported it topped analyst and company estimates by adding another 8.5 million new subscribers during Q4 2020.
The new subscribers pushed Netflix to 203.65 million accounts overall, making it the first company to cross the 200 million subscriber threshold in the process. Both analysts and Netflix itself had projected the company would add around 6 million subscribers during the quarter.
Netflix shares immediately moved higher on Wednesday morning, with the company surpassing its previous all-time high of about $575 within the first hour of trading. By the end of the day, Netflix had easily topped its previous all-time closing high of $556.55, too, which was set last September.
Wednesday’s stock spike pushed Netflix’s market cap to $259 billion, making it more valuable than both AT&T ($206.4 billion) and Comcast ($223.6 billion); Disney has a market cap of $314.4 billion.
Netflix’s Q4 report, beyond the subscriber figure, gave investors a few more interesting nuggets. Two key takeaways from Netflix’s letter to shareholders on Tuesday: Netflix said it plans on being cash-flow neutral by the end of 2021 and cash-flow positive every year after. (Netflix said its “very close” to being free cash-flow positive after posting -$138 million net cash flow during Q4.) The company also said “we believe we no longer have a need to raise external financing for our day-to-day operations.”
On the financial side, Netflix reported earnings per share of $1.19, compared to the $1.36 EPS analysts had projected. Revenue of $6.64 billion matched analyst estimates, although its 21.5% year-over-year sales growth fell short of the 30% year-over-year growth Netflix enjoyed during the same period a year earlier. Investors don’t seem as worried about falling short of Wall Street’s earnings estimates, though, as long as Netflix continues to add subscribers at a healthy rate.
Netflix on Tuesday also said it intends to “maintain $10 billion-$15 billion in gross debt” and will “explore” stock buybacks, something the company hasn’t done since 2011.
Heading into Q4, Netflix had added 28.1 million subscribers during the first three quarters of 2020, which was already more than the company added in all of 2019. The company finished its record-setting year with 37 million new customers joining the fold, thanks in large part to the coronavirus pandemic, which accelerated the streaming revolution by forcing millions of people to stay inside, sitting on their couches. More than 80% of Netflix’s subscriber gains last year came from outside of North America.