Netflix crosses $100 billion market capitalisation as subscribers surge

With the additional revenue generated by the surge in subscribers, Netflix says it plans to spend $7.5 billion to $8 billion on content in 2018.

Our growing appetite for binge watching can not be stopped – even by price hikes from Netflix.

Shares closed up about 3% on Monday in anticipation of a strong earnings report, and soared more than 9% to $248.50 at the time of this writing.

The highest price NFLX stock touched in the last 12 month was $226.07 and the lowest price it hit in the same period was $137.03.

On Monday after the close, Netflix Inc ($NFLX) announced fourth quarter earnings that blew past expectations and sent shares soaring in the post market.

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Amazon and Hulu were already gunning for Netflix when, late a year ago, Disney agreed to buy a major portion of 21st Century Fox’s movie and TV business to boost previously announced plans to create rival Internet streaming services. Yet Netflix enjoys a head start on all those players. Internationally, Netflix continued to see significant growth with 6.36 million net additions in Q4 compared to an estimated 5.1 million.

The U.S. business, where growth had been slowing, also showed vigor. The company is boasting that this is the highest quarter in their history, and it is also an 18% increase from the previous year’s record which was 7.05 million. Zacks Investment Research raised Netflix from a “hold” rating to a “buy” rating and set a $219.00 target price on the stock in a research note on Monday, November 20th.

“In 2017, average streaming hours per membership grew by nine percent year-over-year”.

Netflix, which is facing heated competition from Hulu (17 million subscribers) and Amazon Prime Video (around 90 million customers), is expanding its presence by producing original shows as it helps the company to expand market share from traditional cable TV providers. The company added 1.98 million customers in the USA during the quarter, above its estimates of 1.25 million.

Splurging on new shows comes at a cost.

The firm reports that in 2018 it will continue to invest heavily in original content for an worldwide audience with 30 series on the cards from France, Poland, India, Korea and Japan. To do this, the company expects to raise even more debt financing, forecasting a negative cash flow of $3 billion to $4 billion in 2018. Netflix is still burning cash fast, but investors are happy at the new prospects up ahead.

“We believe our big investments in content are paying off”, Netflix said in a quarterly letter to shareholders.