Netflix Shares Soar on Subscriber Growth; Reed Hastings Steps Down

Netflix (NFLX) shares are rising in extended trading after the largest streaming service provider reported it added many more subscribers than anticipated in the fourth quarter. 

Netflix said global streaming net additions were 7.66 million, higher than its earlier guidance of 4.5 million and also well above analysts’ estimates. Netflix credited the increase on both strong acquisition and retention, driven primarily by the success of the company’s programming lineup during the period.

Netflix noted fourth-quarter revenue rose 1.9% to $7.85 billion, in line with forecasts. It attributed that to a 4% jump in average paid memberships. However, earnings per share (EPS) of $0.12 was much lower than expected. The company anticipates current quarter EPS of $2.82, with sales up 3.9% to $8.17 billion.

Change at the Top

Netflix also announced co-founder and co-CEO Reed Hastings is stepping down. Hastings will remain executive chair. Co-CEO Ted Sarandos will be joined by current COO Greg Peters as co-CEOs. Hastings explained in a blog post that the board has been discussing succession planning for many years, and both he and the board agreed “it’s the right time” to make the change. 

Netflix shares fell during the regular session, but are jumping 6% in after-hours trading.