New member total is record for the quarter and ahead of analyst expectations, erasing fears that growth has slowed

This article is more than 1 year old

This article is more than 1 year old

Netflix shares soared on Tuesday as the streaming service announced higher growth than expected numbers of new subscribers.

The company added 6.96 million new members in the last three months, a record for the quarter and well ahead of analysts expectations, erasing fears that its growth had slowed. It now has some 137 million subscribers worldwide.

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Netflix is the first of the so-called Faang companies (Facebook, Apple, Amazon, Netflix and Google) to report this quarter. The Faangs have driven stock markets to record highs and Netflix’s shares leaped 15% in after hours trading.

The number of both US and international subscribers grew at a clip over the month, with Netflix adding 1.09 million new subscribers in the US and 5.87 million internationally. The company anticipates adding another 9.4 million subscribers during the fourth quarter, up 13% compared with the 8.3 million it added a year ago.

Analysts had cut their price targets for Netflix shares ahead of its earnings report, citing a combination of the strength of the dollar, rising expenses and interest rates. But despite those concerns, and last quarter’s subscriber wobble, Netflix shares have risen 78% this year, as consumers continue to move away from traditional media and access more content online. Netflix is now valued at more than $153bn, more than 21st Century Fox and nearly as much as Disney.

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Over the quarter Netflix launched new seasons of Orange is the New Black, Ozark, Marvel’s Luke Cage and Bojack Horseman. It expects too spend $8bn on content this year, far more than rivals Amazon and HBO as the tech giants battle it out with traditional media companies.

The company reported third-quarter profits of $403m, compared with $129.6m a year earlier.

“Our broad slate of original programming helped drive a solid quarter of growth with streaming revenue increasing 36% year over year and global membership surpassing 130 million paid and 137 million total. We’re thrilled to be growing internet entertainment across the globe,” the company said in a statement.

In July, when Netflix last reported its quarterly earnings, the company’s share price collapsed as subscriber growth appeared to slow. Netflix added 5.15 million subscribers in the second quarter of 2018, missing management’s original forecast for 6.2 million.

Growth in both the US and international were slower than management had been expecting.