Why is Netflix, Inc. stock outperforming the market?

Netflix reported impressive fourth-quarter financial results, surpassing market expectations with a revenue of $10.25 billion, a 16% year-over-year increase, and earnings per share of $4.27. The company added 18.91 million paid subscribers, a 15.9% increase from the previous year, ending the quarter with 301.63 million subscribers. This performance has led to positive analyst sentiment, with several upgrades in ratings and price targets, indicating confidence in Netflix's growth prospects. The company's strategic initiatives, particularly in content and live sports, have been pivotal in driving this growth. Netflix's focus on live sports and advertising-based video-on-demand (AVOD) is seen as a key growth driver, with projections suggesting the AVOD user base could reach 90 million by the end of 2025. Recent content releases, such as "Squid Game" season 2 and live NFL events, have boosted engagement and subscriber numbers. Additionally, Netflix expanded its share buyback program, repurchasing 9.9 million shares valued at $6.2 billion in 2024, with a new total buyback authorization of $17.1 billion. This move aims to return capital to shareholders and support stock value. Overall, Netflix's strong quarterly performance and strategic initiatives position it favorably in the streaming market, with a positive outlook supported by a robust content lineup and significant growth potential.