Netflix Records a 15% Surge in Fourth Quarter Earnings

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Netflix records a surge of 15% after its fourth quarter earnings beat forecasts. With several limitations imposed on traveling, online streaming was a savior for many during the trying times of the bygone year. One of the main gainers from this shift in the focus of entertainment was Netflix. Setting a potent record, the video-streaming service added a record number of 37 million paid subscribers in 2020. Securing record-high gains, the entertainment stalwart is set to engage in stock buybacks with it’s the fourth quarter earnings that surpassed Wall Street’s expectations significantly.

Breaking Records

The video-streaming service – the world’s largest – added a record 37 million paid subscribers in 2020, boosting its global members by 22% to more than 200 million for the first time. Its annual revenue surged 24% to $25 billion as a result, driving its operating income up 76% to $4.6 billion. The video streaming giant also reduced its free cash flow from $1.7 billion in the fourth quarter in 2019 to $300 million last quarter. It expects this number to further reduce to zero.

Stock Buybacks

This influx of capital will be beneficial for the platform as it will allow the daily operations to continue without the need to tap into the debt markets. The company also expects to start paying back stakeholders through the process of stock buybacks. Netflix counts chess drama “The Queen’s Gambit,” period drama “Bridgerton,” and season four of “The Crown” among its recent hits. It has borrowed more than $16 billion over the last decade to build its library of TV shows and movies.

Accessing this accelerating expansion of the platform, it can rightly be noted as one of the few beneficiaries of the Covid pandemic. Lockdowns and travel restrictions increased the number of signups at the platform. As regulations with regard to other leisurely activities like dining out or visiting movie theatres intensified, millions of people across the world spent time indoors, providing the much too gainful momentum to the binge fest on the various streaming platforms. Thus, Netflix was among the segment of companies that experienced unparalleled growth during the course of the pandemic.