Netflix delivered solid fourth-quarter results, but its shares fell after investors focused on slower subscriber growth and a more cautious outlook for the start of the year, the Associated Press reported.
The company announced its fourth-quarter results on Tuesday. Netflix reported profit of $2.4 billion, or 56 cents per share, and said that was a 29% increase from the same time in the prior year. It also reported revenue rose 18% from the previous year to more than $12 billion.
Even with the profit and revenue increases, Netflix’s stock dropped nearly 5% in extended trading, as investors weighed the implications of subscription growth slowing. The results were described as eclipsing analyst projections, but the subscriber trend and forward guidance played a larger role in how the market reacted.
Netflix said its video service ended the year with more than 325 million worldwide subscribers. The report said that indicated it added about 23 million subscribers since 2024, a slowdown from the 41 million subscribers added during 2024.
The AP report tied the faster subscriber expansion in 2024 to Netflix’s low-priced, advertising-supported tier, introduced in 2022, which it said triggered a massive surge in subscribers. For 2025, the subscriber growth rate appeared to be moderating, raising concerns among investors that the growth peak could be approaching after the advertising tier’s earlier momentum.
Netflix also forecast profit for the January-to-March period below analysts’ predictions. It said it would stop buying back its own stock while it tries to complete the Warner Bros. Discovery deal, and it projected revenue growth would taper from 16% in 2025 to between 12% and 14% this year.
In the same outlook, Netflix projected its ad sales are expected to double. Investing.com analyst Thomas Monteiro described the combined message as a challenge, saying, “Overall, this points to a challenging start to the year.”
The financial reporting also landed alongside the stakes of Netflix’s contested bid to take over Warner Bros.’ movie studio and put HBO into its streaming lineup. Earlier Tuesday, the AP reported that Netflix converted its original offer—one that included a stock component—into an all-cash deal, which it said was intended to simplify the process and make it easier for Warner Bros. Discovery shareholders to resist Paramount’s overtures.
Warner Bros. has reiterated its commitment to getting the Netflix deal done, while the AP reported that Paramount was not backing down and could sweeten its counteroffer. On a Tuesday conference call, Netflix co-CEO Ted Sarandos said, “We are no strangers to competition and we are now strangers to change,” and recalled fending off rivals including Walmart and the Blockbuster video chain during Netflix’s earlier days as a DVD-by-mail rental service.
Beyond the bidding process, the AP report said Netflix would need to persuade U.S. regulators that adding HBO to a streaming service with the most subscribers in the country would not stifle competition or drive up prices. It also cited uncertainty reflected in Netflix’s stock price, saying it had fallen by 20% since the agreement with Warner Bros. Discovery was unveiled last month.
The report said Netflix expects to complete the purchase only after Warner Bros. Discovery spins off its cable TV business, a process it said is expected to take six to nine months. Sarandos ended the call by saying, “We are energized as ever to achieve our mission to entertain the world.”