Netflix stock jumps 6% after co-CEO Reed Hastings steps down and subscriber numbers soar
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- Netflix shares rallied 6% ahead of Friday's opening bell after the company released its fourth-quarter results.
- The streaming giant missed its earnings goals but added an above-target 7.7 million subscribers.
- Also, Co-CEO Reed Hastings announced he would be quitting his current role.
Netflix's stock price jumped Friday after the company's fourth-quarter results showed it had added millions more subscribers than Wall Street had expected.
Shares climbed almost 6% in premarket trading, reaching $334.33 before the opening bell. The streaming giant's latest earnings report, released Thursday, showed it added 7.66 million subscribers last quarter, blowing away the 4.57 million forecast by StreetAccount.
Those numbers helped investors look past a gloomy economic outlook and Netflix's disappointing earnings for the fourth quarter. The company logged earnings-per-share of 12 cents – way below the 45 cents that analysts had expected, according to Refinitiv.
"While Wall Street sags with the weight of recession fear and Federal Reserve jitters, Netflix's huge beat on subscriber numbers has injected some much needed optimism into the mix," Hargreaves Lansdown analyst Sophie Lund-Yates said.
Addams family spin-off "Wednesday", murder mystery "Glass Onion", and royal family tell-all documentary "Harry and Meghan" helped attract subscribers to Netflix's streaming service during the final three months of 2022, the company said Thursday.
The firm also announced that co-CEO Reed Hastings would be stepping down to become Netflix's executive chairman. COO Greg Peters has been promoted to co-CEO and will work alongside Ted Sarandos.
Hastings co-founded Netflix in 1997 and oversaw its transition from DVD delivery service to a streaming behemoth and onetime Wall Street darling.
But his departure comes with Netflix's share price locked in a period of long-term decline. Despite Thursday's rally, the stock is still down 38% since the start of 2022.
High inflation, rising interest rates, and fears of a recession have all weighed on markets in that time, but Netflix also suffered its first-ever loss of subscribers during the first quarter of 2022.
"Investors couldn't wait to get rid of Reed Hastings as the joint boss of Netflix judging by the share price reaction to the news of him stepping down," AJ Bell investment director Russ Mould said. "A 7% jump in after-hours trading is the market's way of saying it was time for someone new to help steer the ship."
"While Hastings stays on as executive chairman, the market is more focused on the day-to-day running of the business and the decisions needed to inject more life into the company and how that might translate into share price growth," he added.
Read more: Reed Hastings is stepping down as co-CEO of Netflix
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