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ETFs to Ride on Netflix's Big Subscriber Gains, Q4 Earnings Beat
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Netflix (NFLX - Free Report) reported robust fourth-quarter 2024 results after the closing bell on Tuesday. The world's largest video-streaming company outpaced earnings and revenue estimates and posted the biggest-ever quarterly subscriber gain. Shares of Netflix jumped as much as 15% in after-market hours.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Investors could tap the opportune moment through ETFs with the largest allocation to this streaming giant. These funds include MicroSectors FANG+ ETN (FNGS - Free Report) , Invesco Next Gen Media and Gaming ETF (GGME - Free Report) , First Trust Dow Jones Internet Index Fund (FDN - Free Report) , FT Vest Dow Jones Internet & Target Income ETF (FDND - Free Report) and Communication Services Select Sector SPDR Fund (XLC - Free Report) .
Q4 Earnings in Detail
The company reported earnings per share of $4.27, which outpaced the Zacks Consensus Estimate of $4.19 and the year-ago earnings of $2.11. Revenues rose 16% year over year to $10.25 billion and were above the consensus estimate of $10.12 billion. This represents the biggest gain since late 2021.
The streaming giant added 18.9 million subscribers in the fourth quarter, marking the biggest quarterly subscriber gain in the company's history. With this, Netflix surpassed the 300 million subscriber milestone. The record subscriber growth was driven by record-breaking viewership of Squid Game season 2, two live sporting NFL games, and a successful "Jake Paul vs. Mike Tyson" boxing match. Other top-performing shows included The Diplomat season 2, Senna, The Empress season 2, Outer Banks season 4, The Lincoln Lawyer season 3, and Virgin River season 6.
Investors should note that the company will stop reporting new subscriber figures on a quarterly basis starting from this year.
For the first quarter, Netflix expects revenues to grow 11.2% year over year to $10.42 billion, while earnings per share are expected to rise 5.7% to $5.58.
The streaming giant expects sales to grow faster than predicted in 2025 and projects revenues to grow 14% year over year to the range of $43.5-$44.5 billion. It will boost sales by increasing prices in its home market. The company has raised prices in the United States, Canada, Portugal and Argentina. Its ad-supported plan price increased to $7.99 from $6.99. Its Standard, ad-free tier will now be priced at $17.99, up from $15.49, while its Premium plan cost will increase by $2 to $24.99. Users who want to add an extra member will now pay $8.99, an increase of $1.
Netflix plans to focus on improving its core business with more series and films in 2025 and an enhanced product experience. Later this year, it plans to offer new seasons of its biggest shows, including Squid Game, Wednesday and Stranger Things.
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix’s share coming in at 10% (read: Can "Magnificent Seven" ETFs Retain Their Glory in 2025?).
MicroSectors FANG+ ETN has accumulated $424 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 121,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Invesco Next Gen Media and Gaming ETF offers exposure to companies with significant exposure to technologies or products that contribute to future media through direct revenues. It tracks the STOXX World AC NexGen Media Index, holding 87 stocks in its basket. Netflix is the fourth firm, accounting for 7.7% of the GGME assets.
Invesco Next Gen Media and Gaming ETF has amassed $34.1 million in its asset base and charges 61 bps in annual fees. It trades in average daily volume of 6,000 shares and has a Zacks ETF Rank #3.
First Trust Dow Jones Internet Index Fund (FDN - Free Report)
First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 41 stocks in its basket, with Netflix occupying the third spot at 7.6%.
First Trust Dow Jones Internet Index Fund is the most popular and liquid ETF in the broad technology space, with AUM of $6.7 billion and an average daily volume of around 366,000 shares. FDN charges 51 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: 4 Best-Performing ETF Areas of Q4 That Still Show Promise).
FT Vest Dow Jones Internet & Target Income ETF (FDND - Free Report)
FT Vest Dow Jones Internet & Target Income ETF is an actively managed fund that invests primarily in U.S. exchange-traded equity securities intended to track the Dow Jones Internet Composite Index. It utlizes an "option strategy" consisting of writing (selling) U.S. exchange-traded call options on the Nasdaq-100 Index, or ETFs that track the Nasdaq-100 Index. It holds 42 stocks in its basket, with Netflix occupying the third position at 7.6% share.
FT Vest Dow Jones Internet & Target Income ETF has accumulated $2.3 million in its asset base and trades in an average daily volume of about 2,000 shares. It charges 75 bps in annual fees.
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $20.5 billion in its asset base. It follows the Communication Services Select Sector Index and holds 22 stocks in its basket, with Netflix occupying the fourth position at 6.4% share. About 41% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 9 bps in annual fees and trades in an average daily volume of 4 million shares. It has a Zacks ETF Rank #1.
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ETFs to Ride on Netflix's Big Subscriber Gains, Q4 Earnings Beat
Netflix (NFLX - Free Report) reported robust fourth-quarter 2024 results after the closing bell on Tuesday. The world's largest video-streaming company outpaced earnings and revenue estimates and posted the biggest-ever quarterly subscriber gain. Shares of Netflix jumped as much as 15% in after-market hours.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Investors could tap the opportune moment through ETFs with the largest allocation to this streaming giant. These funds include MicroSectors FANG+ ETN (FNGS - Free Report) , Invesco Next Gen Media and Gaming ETF (GGME - Free Report) , First Trust Dow Jones Internet Index Fund (FDN - Free Report) , FT Vest Dow Jones Internet & Target Income ETF (FDND - Free Report) and Communication Services Select Sector SPDR Fund (XLC - Free Report) .
Q4 Earnings in Detail
The company reported earnings per share of $4.27, which outpaced the Zacks Consensus Estimate of $4.19 and the year-ago earnings of $2.11. Revenues rose 16% year over year to $10.25 billion and were above the consensus estimate of $10.12 billion. This represents the biggest gain since late 2021.
The streaming giant added 18.9 million subscribers in the fourth quarter, marking the biggest quarterly subscriber gain in the company's history. With this, Netflix surpassed the 300 million subscriber milestone. The record subscriber growth was driven by record-breaking viewership of Squid Game season 2, two live sporting NFL games, and a successful "Jake Paul vs. Mike Tyson" boxing match. Other top-performing shows included The Diplomat season 2, Senna, The Empress season 2, Outer Banks season 4, The Lincoln Lawyer season 3, and Virgin River season 6.
Investors should note that the company will stop reporting new subscriber figures on a quarterly basis starting from this year.
For the first quarter, Netflix expects revenues to grow 11.2% year over year to $10.42 billion, while earnings per share are expected to rise 5.7% to $5.58.
The streaming giant expects sales to grow faster than predicted in 2025 and projects revenues to grow 14% year over year to the range of $43.5-$44.5 billion. It will boost sales by increasing prices in its home market. The company has raised prices in the United States, Canada, Portugal and Argentina. Its ad-supported plan price increased to $7.99 from $6.99. Its Standard, ad-free tier will now be priced at $17.99, up from $15.49, while its Premium plan cost will increase by $2 to $24.99. Users who want to add an extra member will now pay $8.99, an increase of $1.
Netflix plans to focus on improving its core business with more series and films in 2025 and an enhanced product experience. Later this year, it plans to offer new seasons of its biggest shows, including Squid Game, Wednesday and Stranger Things.
ETFs in Focus
MicroSectors FANG+ ETN (FNGS - Free Report)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix’s share coming in at 10% (read: Can "Magnificent Seven" ETFs Retain Their Glory in 2025?).
MicroSectors FANG+ ETN has accumulated $424 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 121,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Invesco Next Gen Media and Gaming ETF (GGME - Free Report)
Invesco Next Gen Media and Gaming ETF offers exposure to companies with significant exposure to technologies or products that contribute to future media through direct revenues. It tracks the STOXX World AC NexGen Media Index, holding 87 stocks in its basket. Netflix is the fourth firm, accounting for 7.7% of the GGME assets.
Invesco Next Gen Media and Gaming ETF has amassed $34.1 million in its asset base and charges 61 bps in annual fees. It trades in average daily volume of 6,000 shares and has a Zacks ETF Rank #3.
First Trust Dow Jones Internet Index Fund (FDN - Free Report)
First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 41 stocks in its basket, with Netflix occupying the third spot at 7.6%.
First Trust Dow Jones Internet Index Fund is the most popular and liquid ETF in the broad technology space, with AUM of $6.7 billion and an average daily volume of around 366,000 shares. FDN charges 51 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: 4 Best-Performing ETF Areas of Q4 That Still Show Promise).
FT Vest Dow Jones Internet & Target Income ETF (FDND - Free Report)
FT Vest Dow Jones Internet & Target Income ETF is an actively managed fund that invests primarily in U.S. exchange-traded equity securities intended to track the Dow Jones Internet Composite Index. It utlizes an "option strategy" consisting of writing (selling) U.S. exchange-traded call options on the Nasdaq-100 Index, or ETFs that track the Nasdaq-100 Index. It holds 42 stocks in its basket, with Netflix occupying the third position at 7.6% share.
FT Vest Dow Jones Internet & Target Income ETF has accumulated $2.3 million in its asset base and trades in an average daily volume of about 2,000 shares. It charges 75 bps in annual fees.
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $20.5 billion in its asset base. It follows the Communication Services Select Sector Index and holds 22 stocks in its basket, with Netflix occupying the fourth position at 6.4% share. About 41% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 9 bps in annual fees and trades in an average daily volume of 4 million shares. It has a Zacks ETF Rank #1.