Netflix‘s stock fell as much as 4.8% late Thursday after delivering a financial report that showed revenue slightly short of Wall Street expectations, higher than expected net income, and new subscribers joining the streaming-video service at a healthy clip.
“We added a record 8.8 million paid memberships (1.5 million in the U.S. and 7.3 million internationally), higher than our beginning-of-quarter expectation for 7.6 million paid net adds and up 33% year over year,” Netflix said in a letter to shareholders Thursday afternoon.
For all of 2018, net new subscribers—a metric that Netflix investors watch closely as a sign of the company’s ability to keep growing—grew 33% to 20 million. Netflix ended 2018 with a total of 139.3 million paid memberships around the world.
Netflix, traditionally the first tech company to report its earnings each quarter, said revenue in the fourth quarter of 2018 grew 27.4% to $4.19 billion, slightly behind the consensus of analyst forecasts of $4.21 billion. Netflix earned 30 cents a share last quarter, easily topping the 24 cents a share estimate.
The financial report caps a volatile period for tech stocks in general and Netflix in particular. Netflix rose to a record high of $418 a share in July before plummeting to $233 a share in late December during a broad market selloff. Since then, Netflix has rebounded to $353 a share as of Thursday’s market close, a gain of 51% from its December low.
Netflix has long been volatile because of its risky growth strategy. “Our multi-year plan is to keep significantly growing our content while increasing our revenue faster to expand our operating margins,” Netflix said in its letter. That approach led Netflix to burn through $3 billion last year and it expects to see a similar cash-burn rate in 2019 “and then will improve each year thereafter.”
To recoup its high spending on content, Netflix recently said it would raise prices, with its standard U.S. subscription fee rising to $13 a month from $11 a month, a move that could boost revenue but also increase customer churn.
In the current quarter, Netflix is forecasting net new subscribers to grow by 8.9 million, or 24.6%, to 148.2 million total subscribers, with most of the growth coming in international markets.