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After the close today, Octob er 18, Netflix (NFLX) reported fiscal third-quarter earnings that beat Wall Street projections and added far more subscribers than analysts had expected.

After falling 1.73% in the regular session, the stock added 14.02% in after-hours trading.

For the fiscal third quarter, the company reported adjusted earnings of $3.10 a share versus the expected $2.22 on revenue of $7.93 billion. (Analysts had expected revenue of $7.85 billion.)

Netflix reported that it added 2.41 million net new subscribers in the quarter. That crushed Wall Street projections of an addition of just 1 million. This was the first quarter in 2022 in which the company added net subscribers. In the first and second quarters, the company lost 970,000 and 200,000 subscribers, respectively.

The company attributes its success in the quarter to several TV and film hits, The Jeffrey Dahmer Story, Stranger Things, Extraordinary Attorney Woo, The Gray Man, and Purple Hearts.

Analysts were especially positive about today’s report it seemed to me from their comments because they are looking ahead to the company’s launch of a lower-priced, advertising-supported subscription in November. For example, Citigroup analyst Jason Bazinet said that the upcoming ad tier “could point to material upside” in free cash flow. Evercore ISI’s Mark Mahaney predicted that the ad-supported service will bring in $1 to $2 billion in incremental revenue by 2024.

On a call prior to the ad tier announcement, Netflix Worldwide Advertising President Jeremi Gorman said the platform “nearly sold out all of its [ad] inventory” globally for launch.”

Netflix forecasted it would add 4.5 million subscribers during its fiscal first quarter and said it expects revenue of $7.8 billion.

Let me add a couple of words of caution.

First, I think it would be useful at this point to question the draw of an ad-supported service at $6.99 when competitive streaming services from Disney (DIS) and Amazon (AMZN). for example, are charging only a dollar or two a month more for streaming without ads.

Second, and this is really a caveat about the entire streaming sector rather than just Netflix: The business is increasingly one driven by hit content that costs hundreds of millions to produce. I’m thinking here of House of the Dragon on HBO Max and Rings of Power on Amazon. Are we headed to something like the economic model of the airline industry where no one really makes much money because putting fannies in seats costs so much?

Those caveats aside the big beat is likely to keep the current bounce going for another day or more. The Standard & Poor’s 500 closed up 1.14% today and the NASDAQ Composite added 0.90%.