Netflix stock surges 13% as subscriber growth resumes, analysts believe 'dark days are over'
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Netflix (NASDAQ:NFLX) shares surged nearly 13% on Wednesday after the streaming TV giant reported third-quarter results that topped expectations and gave a forecast for subscriber growth that suggested its recent woes may be over.
Late Tuesday, Netflix (NFLX) said that during its third quarter, it added 2.41M net subscribers--more than double the 1M new subscribers it's had earlier forecast--to bring its worldwide subscriber total to 223.09M. And the situation appears to be getting even better for Netflix (NFLX), and it expects to add 4.5M new subscribers during the fourth quarter.
Netflix (NFLX) co-Chief Executive Reed Hastings didn't hide his feelings about the company's subscriber gains and outlook.
"Thank God we're done with shrinking quarters," Hastings said on Netflix's (NFLX) earnings call, adding that âit's "a big deal to go back to the positivity." 
Reaction to Netflix's (NFLX) results and outlook was positive across Wall Street. Wells Fargo analyst Steven Cahall, who has an equal weight rating and a $300 price target on Netflix (NFLX), noted that the "dark days are over" with the worst appearing to be behind the company.
"Netflix was un-ownable when net adds turned negative, and while there will always be ebbs and flows in the slate, it's now tough to see [subscriber] loss in future years," Cahall said.
Cahill did mention that the potential for higher levels of customer turnover, or churn, still remains an issue. However, Cahall said that Netflix (NFLX) is set to soon launch an ad-supported subscription option, and then paid sharing efforts in 2023, "it's tough to imagine Netflix as a negative net [subscriber addition] story again in the near future."
Cahall added that Netflix (NFLX) is a "stock in transition" as the company matures into a multi-faceted business, which should make it more "stable."
JPMorgan analyst Doug Anmuth upgraded Netflix (NFLX) to overweight from neutral and raised his price target to $330 a share from $240 following the results. Anmuth said he has "increased conviction" that the company can accelerate revenue growth thanks to monetization of account sharing and the ad-supported tier.
"We're encouraged that Basic With Ads unit economics should be at least neutral across all markets, and we believe significantly accretive in large ad markets such as the U.S., with even greater positive impact to revenue and operating profit," Anmuth wrote.
Anmuth added that following the secondhalf of season four of Stranger Things and Monster: The Jeffrey Dahmer Story, Netflix's (NFLX) two most popular English series ever, the company "may be getting back on track in terms of content consistency."

Bank of America analyst Nat Schindler, who has an underperform rating and a $196 a share price target, said the net subscriber addition was aided by the fourth season of Stranger Things, with all regions growing quarter-over-quarter. However, Netflix (NFLX) is still reliant on hit content to drive growth.


"Our prior concerns of Netflix becoming vastly more hit-driven have all but come to fruition with the staggered release of Stranger Things," Schindler wrote. "We think Netflix has very few high-impact original shows for [the fourth quarter]."



Netflix's (NFLX) strong gains also helped the stocks of its streaming media peers rise following the results.
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