Netflix Earnings: Stellar Results Show Durable Strengths but Also Some Tailwinds That Should Subside

A big jump in subscriber additions highlighted Netflix’s very strong third quarter. Margins, cash flow, and other underlying trends were equally important in supporting the durable strength we see in Netflix’s business. Netflix anticipates a similarly strong fourth quarter, and we see several reasons for further optimism. We’re raising our fair value estimate to $350 from $330, but we think the 12% spike in reaction to earnings was a little overenthusiastic. We expect subscriber growth will moderate, and an eventual end to the actors’ strike will likely result in a big increase in cash content spending in 2024.