The Rise in Netflix Subscriptions Slows as the Clampdown on Password Sharing Comes into Play

Netflix (NFLX, Financial) recently announced a dip in its net subscription numbers over the summer, following a significant increase last year tied to actions against account sharing. Subscriber growth in the third quarter was 5.1 million, marking a 42% decrease from the same time last year.

However, even with slower monthly subscriber growth, Netflix’s financial future looks promising. The streaming giant, based in Los Gatos, California, reported impressive revenue of $2.36 billion, or $5.40 per share, an increase of 41% compared to last year. Organic growth fueled a 15% rise in global revenue to $9.82 billion, exceeding analyst expectations based on FactSet Research data.

As of September, Netflix boasts an impressive global subscriber count of 282.7 million, maintaining its dominance in the streaming market. Looking ahead, Netflix management predicts a healthy 15% YoY increase in revenue for the fourth quarter, surpassing consensus estimates.

This positive outlook has helped alleviate investor concerns over the slower subscriber growth rate. Post-announcement, Netflix’s share price surged by 3.8% in after-hours trading and has witnessed a remarkable rise of over 40% this year to date.

Netflix’s co-CEO Ted Sarandos outlined the company’s growth strategy, highlighting its policy to curb account sharing. Although initially implemented during a period of near-stagnation in subscriber numbers in 2022, this strategy has catalyzed substantial growth in the subscriber base, a turn of events not mirrored by many competitors grappling with tighter consumer budgets.