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The stock price of Netflix (NASDAQ: NFLX) reached an all-time high on Wednesday as investors responded optimistically to its fourth-quarter financial report showing strong paid subscriber growth. 

NFLX stock traded as much as $593.29 per share on Wednesday but trimmed some of its gains. Still, the stock closed with a nearly 17% gain to $586.34 per share.

Netflix 4Q financial performance

On Tuesday, Netflix reported $1.19 in earnings per share (EPS), lower than the $1.39 EPS expected by Wall Street analysts for the fourth-quarter fiscal year 2020.

Its revenues increased 20% to $6.57 billion year-over-year. Analysts expected the company to generate $6.62 billion.

During the period, Netflix said its global paid net subscribers increased 20.4% or 8.5 million to more than 201 million. Analysts expected net additions of 6.47 million. It added 28.1 million paid subscribers during the first nine months of 2020. The numbers showed strong growth in its global paid membership.

In a note to investors, Jeff Wlodarczak, an analyst at Pivotal Research wrote, “Importantly, while Netflix beat subscriber expectations in all major territories, Netflix’s most mature market U.S./Canada reported materially better than expected nearly +900K net new subscribers (vs. our +375K expectation) which highlight that the ultimate penetration for NFLX services globally could be higher than anticipated.”

Additionally, Netflix reported that it may no longer need to raise external financing to fund its day-to-day operations. The company said it expects to become cash-flow positive after 2021. 

"Wit $8.4 billion in cash on our balance sheet at the end of the quarter plus our $750m credit facility (which is undrawn), our need for external financing is diminishing. As indicated last quarter, we don't have plans to access the capital markets this year, according to the company in its letter to shareholders.

Jefferies analyst Alex Giaimo commented:  “Netflix has been working towards this moment for multiple years, and is now in the unique position to continue its aggressive content spend while still generating significant future cash flows.” 

 “While the 4Q sub beat will garner most of the attention, we believe the improved free cash flow commentary and future capital independence is the more important positive takeaway.” Added Giaimo.

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