Netflix (NFLX) shares jumped higher Friday, taking the stock to the highest levels in sixteen months, following reports suggesting the streaming service's crackdown on password sharing has boosted its overall subscriber base.
The Wall Street Journal reported Friday that Netflix, which began notifying users in the United States that it would limit their ability to share passwords, and force those living outside the home of the account holder to purchase their own subscription, had its best four-day sign-up period in four years over the final days of May.
The Journal cited data from Antenna, a streaming analytics group.
Netflix has said password sharing, which involves an estimated 100 million households that aren't currently paying for the service, "undermines our long-term ability to invest in and improve".
Analysts have also said Netflix's new password sharing crackdown, which uses location services data, could provide an offsetting revenue spike as users pay the added fee required to use a device to access Netflix at different locations.
The password sharing crackdown is likely to boost overall subscriber gains, which are expected to rise by 3.43 million over the three months ending in June, but the revenue addition for each new sub gained by signing up to a password sharing account at $7.99 per person will be around half of a full-scale membership.
Netflix shares were marked 3.4% higher in early afternoon trading Friday to change hands at $423.37 each, the highest since February of 2022 and a move that would extend the stock's year-to-date gain past 43%.
Netflix rolled out the first phase of its 'paid sharing' effort earlier this spring in Canada, New Zealand, Spain and Portugal, and launched its main U.S. focus on May 23.
Netflix, which no longer provides specific guidance on new subscriber additions, added 1.75 million new subscribers over the first three months of the year, missing the Street forecast of just over 2 million.
First quarter profits were pegged at $2.88 per share, down 18% from the same period last year, while group revenues rose 3.3% to $8.162 billion.
"We’re pleased with the most recent launches of paid sharing, and while we could have launched broadly in Q1, we found opportunities to improve the experience for members," Netflix said in its quarter shareholders letter in late April. "We learn more with each rollout and we’ve incorporated the latest learnings, which we think will lead to even better results."
Netflix said its sees earnings in the region of $2.84 per share and revenues of $8.24 billion for the June quarter
