Netflix shares soar after subscriber growth surges at a record rate

Latest figures mark a turnaround since second quarter, when streaming service missed subscriber targets

Netflix shares jumped 14 per cent in after-hours trading as the online streaming service announced it added a record number of new subscribers between July and September.

The company reeled in 7 million new subscribers during the third quarter, one third more than Wall Street had expected, bringing the total customer base to 137 million worldwide.

The group is planning to add 28.9 million customers this year, and is aiming for 9.4 million new subscribers this quarter.

“There is so much growth ahead in streaming video entertainment, we’re going to focus on that for a very long time,” said chief executive officer Reed Hastings.

Subscribers in international markets made up 84 per cent of new customers in the third quarter. Netflix highlighted India as a particularly strong performer, noting that new original series Sacred Games and Ghoul had made the service seem “more local, more relevant” to Indian viewers.

Netflix marked the third quarter by releasing more original content than ever before, including new series of hit shows Orange is the New Black and BoJack Horseman. The group is investing $8bn (£6bn) in programming this year, in a bid to attract new customers, which appears to be paying off.

The latest figures marked a turnaround from the second quarter, when shares tumbled after Netflix missed subscriber targets.

“The question at the end of Q2 was whether that miss was an aberration or signs of a longer-term slowdown in the business,” said Jim Nail, analyst at Forrester Research. “The answer: an aberration, likely the results of a somewhat low volume of new content last quarter.”

Netflix reported revenue of $4bn in the third quarter, a 34 per cent increase on the $2.99bn reported for the same period last year, and streaming revenue made up the bulk of that total, at $3.91bn.

Support free-thinking journalism and subscribe to Independent Minds