Subscriber growth

Netflix posted fourth-quarter results above analysts estimates and reported positive cash flow for the year. The company said it does not need to borrow and can afford share buybacks, while continuing to actively invest in growth opportunities.

Shares in Netflix (NFLX), up 47.7% over the past 12 months, rose on Tuesday after the streaming video giant released its fourth-quarter and full-year 2020 results, which have been a success for the company.

Although the COVID-19 pandemic halted movie production for nearly three quarters, demand for streaming entertainment services grew worldwide, driving growth for both Netflix and its competitors Disney (DIS), Apple (AAPL) TV+, WarnerMedia's HBO Max (AT&T) and Peacock from NBCUniversal.

Earnings per share were $1.19, $0.19 worse than analysts estimate of $1.38 and 8% below last year.

Earnings rose 21% to $6.64bn, up from Wall Street's average estimate of $6.6bn.

Netflix reported 8.5 million new global paid subscribers last quarter versus an expected 6.47 million.

Netflix's number of new global paid subscribers for all of 2020 rose 31% to 37 million, up from 28 million in 2019. According to Netflix's press release, EMEA accounted for 41% of new paid subscribers for the full year, APAC (Asia Pacific) was the second largest source of growth at 9.3 million for the year (up 65% year-on-year).

"Combined with our cash balance of $8.2bn and an undrawn credit facility of $750m, we believe we no longer need to raise external funding for our day-to-day operations", the company said.

Forecasts from Netflix

Netflix forecasts first-quarter 2021 revenues of $7.13bn. (an estimated 23.6% increase over Q1 2020) and earnings per share will rise 90% to $2.97, with quarterly earnings of $1.36bn. (almost twice as much as a year earlier). Analysts forecast Q1 Netflix earnings per share of $2.10 on revenues of $7.02bn. Netflix plans to add 6 million new subscribers globally in the current quarter, indicating a slowdown in additions.