Netflix shares surge after company surpasses membership expectations

Netflix Inc. surpassed 200 million global paid subscribers at the end of last year, reporting 8.5 million paid net additions during the fourth quarter of 2020.

The company ended the period with about 203.7 million members in total, up by about 37 million for the full year and representing a new record for its membership growth.

Netflix in October 2020 had guided for 6.0 million paid net additions in just-ended fourth quarter.

The company on Jan. 19 forecast another 6.0 million paid net subscriber additions in the first quarter of 2021, though executives previously said Netflix's membership growth could wane in the first half of this year after unprecedented growth driven by the COVID-19 pandemic and related shelter-at-home guidelines.

About 860,000 of Netflix's fourth-quarter 2020 additions came from the U.S. and Canada, a notable acceleration from the 180,000 net adds it reported for the region in the third quarter of 2020. The third-quarter growth marked a low point for the region's membership additions in 2020.

Netflix collected $6.64 billion in revenue for the fourth quarter of 2020, up 21.5% over the prior-year quarter. That drove $542.2 million in net income, or $1.19 per share, compared to $587.0 million, or $1.30 per share, in the fourth quarter of 2019.

The S&P Capital IQ consensus EPS estimate for the just-ended quarter was $1.39, or $1.41 on a normalized basis.

For the full year, Netflix reported $2.76 billion in net income, or $6.08 per share, compared to $1.87 billion, or $4.13 per share, in 2019.

The consensus EPS estimate for the full year was $6.28, or $6.33 on a normalized basis.

The company ended the year with positive free cash flow of $1.9 billion.

Shares of Netflix surged by almost 11% in after-hours speculation following the earnings release.