Netflix, an American over-the-top content platform and production company, ended its most significant year with a bang. It increased its stock to a record high after gaining more customers than expected. Netflix announced that it no longer requires to borrow money to build its entertainment empire.
Everyone’s favorite company, Netflix, attracted 8.51 million new subscribers in the final three months of 2020. The success was supported by the popularity of hit shows such as Bridgerton and the Queen’s Gambit. That outpaced Netflix’s forecast and the 6.06 million projected by Wall Street. Netflix shares increased by 15% in Wednesday trading, which is the highest since October 2016.
The Queen’s Gambit and Bridgerton were both significant hits for Netflix. Queen’s Gambit was viewed by 62 million users in its first 28 days on the service, while Bridgerton reaches nearly 63 million accounts.
After Tuesday’s close, the earnings report included two key milestones for the company. Netflix passed the 200 million subscriber mark for the first time and announced it does not need debt to fuel its growth.
As Netflix has $8.2 billion in cash, the company announced it no longer requires external financing. It is also considering stock buybacks, which it has not done in about a decade.
Netflix gained 36.6 million users in 2020
The coronavirus pandemic has provided a massive increase to Netflix’s business, forcing people inside and restricting other entertainment options like movie theatres and concerts. Netflix added 25.9 million users in the first six months of 2020. It ended up adding 36.6 million customers in all, which is its record.
The company has repeatedly warned that the first half of last year’s surge would limit its growth in subsequent quarters. Spencer Neumann, the company’s chief financial officer, warned this would continue to affect growth in 2021. Netflix gave a conservative estimate for the current quarter. The company anticipates adding 6 million new subscribers in the period, compared with an average analyst estimate of 7.45 million.
Moreover, the company’s growth throughout 2020 dispelled two common critiques. The company’s Skeptics have long identified its debt as a looming disaster, arguing an economic recession would harm the company and cause users to cancel subscriptions.
On Wednesday, Netflix shares increased to $577.77 in New York trading. Over 60% of its customers now live outside the U.S. and Canada. Additionally, 83% of its new users in 2020 came from abroad. Europe provided 41% of its new users, almost 15 million people, while Asia added 9.3 customers.