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Netflix shares popped more than 12% after it posted earnings.
The company reported a boost in subscriber growth driven by a password-sharing crackdown efforts and interest in its new ad-supported tier.
Netflix also raised prices for its basic and premium plans in the U.S.

Thomas Trutschel | Photothek | Getty Images

LOS ANGELES — Netflix shares surged after the closing bell Wednesday as the company reported a boost in subscriber growth driven by a password-sharing crackdown efforts and interest in its new ad-supported tier.
The streaming giant added 8.76 million global subscribers during the quarter, higher than 5.49 million Wall Street had expected, according to estimates from Street Account. It’s the biggest quarterly net add total for the company since it added 10.1 million subscribers in the second quarter of 2020 – when Covid restrictions kept people home.

Here are the results:

Earnings: $3.73 vs $3.49 per share expected, according to LSEG, formerly known as Refinitiv
Revenue: $8.54 billion vs $8.54 billion expected, according to LSEG
Total memberships expected: 247.15 million vs. 243.88 million expected, according to Street Account

Netflix said that its ad plan membership grew nearly 70% quarter-over-quarter, although it did not disclose what percentage of its base is subscribed to this tier.
The results were the latest confirmation that Netflix rules the streaming world, as its would-be rivals scratch and claw to become profitable.
The company’s dominance shows in its pricing power. Netflix said it is keeping its ad tier pricing at at $6.99 a month in the U.S. while its basic and premium services will see a price hike starting Wednesday. Netflix’s basic plan will now cost $11.99 (up from $9.99) and premium will be $22.99 a month (up from $19.99). Netflix’s standard plan will remain at $15.49 a month.
The price increases come as the company seeks to improve its profitability and grapple with higher production costs.

Read more: Netflix is leaning more into sports programming
As part of its new deal with Hollywood’s writers, Netflix, alongside other members of the Alliance of Motion Picture and Television Producers, have agreed to higher wages and monetary benefits based on streaming popularity. The AMPTP has yet to finish negotiations with striking actors, but expectations are that costs for creating content will rise when a new contract is finalized.
“We spent hours and hours with SAG-AFTRA over the last few weeks and we were actually very optimistic that we were making progress,” said co-CEO Ted Sarandos during the company’s taped earnings comments Wednesday. “But then at the very end of our last session together the guild presented this new demand on top of everything of a per subscriber levy, unrelated to viewing or success, and this really broke our momentum unfortunately.”
Sarandos noted that Netflix and other members of the AMPTP remain committed to reaching an agreement with actors. It is unclear when negotiations will continue. Talks have been stalled for about a week.
Representatives from SAG-AFTRA did not immediately respond to CNBC’s request for comment.
The company forecast that revenue will jump 11% in the fourth quarter, reaching $8.69 billion, below Wall Street expectations of $8.77 billion. Netflix said it expects net subscriber adds will be similar to the third quarter.
It warned that the strength of the U.S. dollar in recent months will result in a roughly $200 million drag on fourth-quarter revenue.
As for Netflix’s profitability, the streamer now expects its full-year 2023 operating margin will be around 20%, the high end of its previous forecast range of 18% to 20%. It also said full-year 2024 should see operating margins of 22% to 23%.
The company also addressed shareholder concern about its executive compensation model, telling investors that it would make “substantial changes” in 2024 to a more conventional model. Compensation will still be based on performance.
Sarandos and former co-CEO Reed Hastings each took home more than $50 million in 2022. Hastings took most of his earnings in stock options, while Sarandos elected to have a $20 million base salary and the rest in stock.
After Greg Peters was named co-CEO and Hastings stepped down, the company set a salary cap of $3 million for executives. However, they are still entitle to an annual target bonus and additional stock rewards.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is a member of the AMPTP. More

Pfizer will price a five-day course of its Covid antiviral drug Paxlovid at $1,390 when the company starts to sell it on the commercial market later this year. 
A company spokesperson on Wednesday confirmed the price, which was first reported by the Wall Street Journal. 
But health insurance plans will likely pay much less than the nearly $1,400 list price for Paxlovid, meaning patients will probably have small or no out-of-pocket costs.

Paxlovid, Pfizer’s antiviral medication to treat the coronavirus disease, is displayed in this picture taken on Oct. 7, 2022.
Wolfgang Rattay | Reuters

Pfizer will price a five-day course of its Covid antiviral drug Paxlovid at $1,390 when the company starts to transition it to the commercial market later this year.
A company spokesperson on Wednesday confirmed the price, which was first reported by The Wall Street Journal. That list price, which is before rebates and other discounts to insurers and pharmacy benefit managers, is more than double the $529 the federal government paid for Paxlovid.

The government has purchased and distributed Paxlovid to the public for free since December 2021, when the FDA first authorized the treatment. But beginning in 2024, Pfizer will sell Paxlovid directly to health insurers, which comes as demand for Covid vaccines and treatments slumps nationwide.
Doctors, health experts and patient advocates have raised concerns that a higher price will curb access to the life-saving treatment, which has been shown to reduce the risk of severe disease and death from Covid among vulnerable patients, such as those with diabetes, heart conditions or a weakened immune system. 
But health insurance plans will likely pay much less than the nearly $1,400 list price for Paxlovid, meaning patients will probably have small or no out-of-pocket costs. Pfizer also noted that it is working with payers to lower copays for patients.
Pfizer plans to subsidize copays of people who are commercially insured at least through 2028.
“As always, Pfizer’s goal is to ensure broad and equitable access to our medicines. We are working diligently with payers to achieve the best possible formulary placement for PAXLOVID, resulting in low OOP costs for patients,” a spokesperson for the company said in a statement to CNBC.

On Friday, the company also said it expects revenue from Paxlovid to come in $7 billion lower than previously anticipated, partly due to the return of doses labeled for emergency use by the federal government.
Overall, Pfizer now expects 2023 sales of $58 billion to $61 billion, down from its previous guidance of $67 billion to $70 billion. Pfizer said it cut its revenue outlook “solely due to its Covid products.”
— CNBC’s Angelica Peebles contributed to this report.Don’t miss these CNBC PRO stories: More

Executives from top U.S. space companies called for improvements to the Federal Aviation Administration during a Senate hearing on Wednesday.
SpaceX VP Bill Gerstenmaier emphasized that the FAA’s commercial space office “needs at least twice the resources that they have today” for licensing rocket launches.
The FAA was not invited to testify.

A SpaceX Falcon Heavy rocket with the Psyche spacecraft launches from NASA’s Kennedy Space Center in Cape Canaveral, Florida, on October 13, 2023.
Chandan Khanna | AFP | Getty Images

With the pace of rocket launches accelerating, and competition from China rising, executives from top U.S. space companies on Wednesday urged senators to improve the Federal Aviation Administration’s regulatory and licensing processes.
“We’ve entered an inflection point, with incredible innovation in commercial space launch. The criticality is especially true in the face of strategic competition from state actors like China,” SpaceX Vice President of Build and Flight Reliability Bill Gerstenmaier said during his testimony. “SpaceX is under contract with NASA to use Starship to land American astronauts on the moon before China does.”

The Senate Subcommittee on Space and Science heard from a trio of company representatives from SpaceX, Blue Origin and Virgin Galactic, as well as a pair of industry experts.
Gerstenmaier emphasized that the FAA’s commercial space office “needs at least twice the resources that they have today” for licensing rocket launches. While he acknowledged the FAA is “critical to enabling safe space transportation,” Gerstenmaier added that the industry is “at a breaking point.”
“The FAA has neither the resources nor the flexibility to implement its regulatory obligations,” Gerstenmaier said.
Although the hearing largely focused on the FAA’s role in the space industry, spokespeople for the Senate committee and the FAA confirmed that the regulator was not invited to testify.
“Keeping pace with industry demand is a priority and is important for several reasons, including meeting our national security and civil exploration needs. We’re working diligently to attract, hire and retain additional staff,” an FAA spokesperson told CNBC in a statement.

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The other four panelists’ testimonies largely echoed SpaceX’s viewpoint on the need to bolster the FAA’s ranks and speed up the process of approving rocket launches. Phil Joyce, Blue Origin senior vice president of New Shepard, said the FAA “is struggling to keep pace” with the industry “and needs more funding to deal with the increase in launches.”
Likewise, industry expert Caryn Schenewerk, a former leader at SpaceX and Relativity Space, said that the FAA’s recent changes have yet to “streamline licensing reviews” and instead have “proven more cumbersome and costly.”
Wayne Monteith — a retired Air Force brigadier general who also led the FAA’s space office — said that Congress should consider consolidating space regulations.
“I believe a more efficient one stop shop approach to authorizing and licensing space activities is necessary,” Monteith said.

What about private human spaceflight?

Crew members from Italy hug each other after their return from Virgin Galactic’s rocket plane first commercial flight to the edge of space, at the Spaceport America facility, in Truth or Consequences, New Mexico, U.S., June 29, 2023. 
Jose Luis Gonzalez | Reuters

But while companies want to see the FAA move faster in licensing rocket launches for uncrewed missions that most often carry satellites, human spaceflights are a different story.
The executives urged senators to extend a “learning period” that limits the FAA’s regulation largely to protecting the public.
That period is set to expire in January, but witnesses on Wednesday were unanimous in their belief that the FAA shouldn’t add new regulations on flying people to space.
“The commercial human spaceflight industry is relatively new. Until recently, human spaceflight has primarily been in the domain of governments and access to space for humans was largely reserved for those in the national astronaut corps,” said Sirisha Bandla, a Virgin Galactic astronaut and vice president of Government Affairs and Research.
“There are only three companies currently carrying humans to space, and it would be premature to base occupant safety regulations on this extremely small set of data at this time,” Bandla added in her testimony. More

Netflix shares surged after hours on stronger-than-expected subscriber gains.
The quarterly adds, and the company’s projection that next quarter’s gains should be similar, put an end to a period of low or no growth for Netflix.

Greg Peters, Co-CEO of Netflix, speaks at a keynote on the future of entertainment at Mobile World Congress 2023.
Joan Cros | Nurphoto | Getty Images

Netflix is correcting the Great Netflix Correction.
There once was a time, long ago in April 2022, when Netflix reported a loss of 200,000 subscribers. The company forecast it would lose an addition 2 million subscribers in the second quarter that year, a number that ended up being about 1 million when Netflix announced actual results three months later.

The losses sent shockwaves through the media landscape that are still felt today. Investors soured on the subscription streaming business. Rivals such as Disney and Warner Bros. Discovery began publicly championing profitability over subscriber growth. Netflix shares fell about 60% in the coming months. At some point, media executives and journalists started calling the shift in sentiment the Great Netflix Correction.
But those days are now over. Netflix reported third-quarter results that definitively end that chapter, ushering in a new era of growth. Buoyed by a global password sharing crackdown and an advertising-supported tier ($6.99 per month in the U.S.) that’s 55% cheaper than its standard plan, Netflix added nearly 8.8 million subscribers in the quarter, topping Wall Street estimates. That’s more than the company has added in any quarter since the second quarter of 2020, when Netflix gained 10 million subscribers during the early days of the Covid pandemic.
Netflix is also forecasting that subscriber growth next quarter will be similar to the second quarter, plus or minus “a few million.”
“The biggest surprise to me is the subscriber growth outlook through the fourth quarter,” said Evercore ISI analyst Mark Mahaney.
Read more: Netflix is leaning more into sports programming

For much of 2022, it appeared as though Netflix needed a growth narrative. The company launched a video game service and tried to get investors to stop stressing out about subscriber growth. In November, it introduced its cheaper advertising tier — a product Netflix hoped would be appealing for those who had historically shared passwords and paid nothing.
“We are increasingly focused on revenue as our primary top line metric,” Netflix wrote in its 2022 third-quarter earnings shareholder letter. “This will become particularly important heading into 2023 as we develop new revenue streams like advertising and paid sharing, where membership is just one component of our revenue growth.”
Netflix’s revenue did increase — nearly 8% to $8.54 billion for the quarter. The company forecast that revenue will jump 11% in the fourth quarter, reaching $8.69 billion.
It turns out membership growth did, in fact, return. Investors appear to once again view Netflix as a growth opportunity. Shares jumped 12% after hours.
That’s not to say that Netflix is erasing the Great Netflix Correction from history. Even with Wednesday’s after-hours jump, Netflix shares are trading around $390. That’s a far cry from the $690-per-share level reached in October 2021.
Still, it’s now clear that Netflix has entered a new chapter. It’s unclear exactly how long the password sharing crackdown runway is for growth in coming quarters. Netflix previously estimated about 100 million households share passwords, but it’s still unclear how many of these moochers will actually subscribe to accounts of their own — and for how long.
It may be too early to declare victory, but it’s not too early to say Netflix avoided defeat.
WATCH: Netflix’s Q4 subscriber growth outlook is a “big surprise,” says Evercore analyst More

Costco’s longtime CEO Craig Jelinek is stepping down.
He will be replaced by Ron Vachris, the company’s chief operating officer.
The warehouse club has benefited from sales growth, fueled by pandemic pantry-loading, inflation and millennials moving to the suburbs.

A Costco Wholesale warehouse sign is seen outside a store in Silver Spring, Maryland, on Aug. 5, 2023.
Mandel Ngan | Afp | Getty Images

Costco’s longtime CEO Craig Jelinek is stepping down from the company after the warehouse club’s spree of pandemic- and inflation-fueled growth.
The company said Wednesday that Ron Vachris, the company’s chief operating officer, will replace him. The change will take effect Jan. 1.

In a news release, Costco said the two executives have worked together over nearly the past two years. It described the move as “the culmination of the long-standing succession plan.”
Shares were flat on the news in after-hours trading. So far this year, the company’s stock has shot up 26%, outperforming both the gains of the S&P 500 and most other publicly traded retailers.
Costco has benefited from sales growth, especially from customers who pantry-loaded and cooked more during the Covid-19 pandemic, and more recently, sought relief from inflated grocery and gas prices. Warehouse clubs, including rival Walmart-owned Sam’s Club, have also gotten a boost from millennials moving to the suburbs.
Over the past year, the retailer’s sales have largely held up, though it has seen a pullback in some discretionary categories such as jewelry and electronics. In the most recent fiscal quarter, which ended early September, shoppers visited more but spent less.
Costco’s average transaction amount in the quarter dropped nearly 4.5% in the U.S., even as traffic rose 5% on a year-over-year basis.

Vachris, the incoming CEO, began his career at Costco as a forklift driver. He has been at the company for more than 40 years.
Jelinek has been at the helm of the warehouse club since January 2012. He will stay at Costco through April in an advisory role. He also plans to remain on the board of directors, the company said.
Separately, the company said on Wednesday that its board has approved a quarterly cash dividend on Costco common stock of $1.02 per share that will be paid in mid-November.Don’t miss these CNBC PRO stories: More

Delta will increase the number of Sky Club visits for some American Express cardholders.
It will also slightly lower thresholds to earn elite status.
Delta’s CEO said the airline went “too far” in the changes it announced last month.

Delta’s new SkyClub at John F. Kennedy International Airport in New York.
Leslie Josephs/CNBC

Delta Air Lines on Wednesday walked back some of the broad restrictions it placed on access to its popular airport lounges and trimmed thresholds to earn elite status after complaints from customers.
Delta last month first announced sweeping changes to its loyalty program so that it is based solely on how much customers spend, and announced dramatic limitations to entry to its Sky Clubs for customers with certain American Express credit cards.

Delta CEO Ed Bastian said in late September that the airline went “too far” with its changes. Delta has been grappling with how to handle swarms of elite frequent flyers and high-fee credit card holders that caused long lines and crowding at the clubs.
“I have read hundreds of your emails, and what’s been most clear to me is how much you love Delta and the disappointment many of you felt by the significance of the changes,” he said in an email to customers announcing the tweaks to the programs on Wednesday. “I appreciate your opinions and understand your disappointment. Your voice matters, and we are listening.”
Following the Covid-19 pandemic, airlines have grappled with how to best reward frequent flyers who returned in droves after spending heavily and racking up miles on rewards cards, even when they weren’t traveling.
Carriers and credit card companies are racing to build bigger lounges to fit more people.
“We very much believe in never causing a situation where everyone has a premier status which obviously results in no one receiving an adequate level of premier benefits,” United Airlines chief commercial officer Andrew Nocella said on an earnings call Wednesday.

Sky Club entry changes

Delta CEO Bastian said access to the airline’s airport lounges have been a top concern for customers, many of whom had unlimited access to Sky Clubs through credit cards.
Starting Feb. 1, 2025, cardholders of the Delta SkyMiles Reserve and Delta SkyMiles Reserve Business American Express Card will get 15 visits to Sky Clubs per year, up from a planned limit of 10 per year. Another change is those cardholders will have unlimited visits for the entire day. For example, a traveler could visit lounges in multiple cities, or twice in one day.
They will also be able to buy Sky Club day passes for $50 a day after they have used up their days.
American Express Platinum cardholders will get 10 visits a year, up from a planned limit of six, starting February 2025.
However, Delta SkyMiles Platinum cardholders still won’t get automatic Sky Club access through the card starting next year, a change Delta announced last month. Customers can buy a membership or enter if they meet loyalty program spending thresholds for elite status.

Earning elite status gets (slightly) easier

Bastian said another concern of customers was how to access elite frequent flyer status, which comes with perks from early boarding and complementary upgrades to vacation credits.
Delta last month said it will reward customers based on how much they spend on Delta or co-branded credit cards, a similar model to one American Airlines uses. That won’t change, but Delta is lowering the spending requirements to earn the status tiers.
Each dollar spent on Delta equals one Medallion Qualifying Dollar, but credit card holders also earn fractions of MQDs when they spend on the card.
Here are the changes to the status requirements in Medallion Qualifying Dollars:

Silver Medallion Status: from 6,000 to 5,000 MQDs
Gold Medallion Status: from 12,000 to 10,000 MQDs
Platinum Medallion Status: from 18,000 to 15,000 MQDs
Diamond Medallion Status: from 35,000 to 28,000 MQDs

Don’t miss these CNBC PRO stories: More

Drugstore chain Rite Aid revealed it lost more than $1 billion in the months before it filed for bankruptcy.
The company issued a warning to investors that said it may not be able to keep its business running.
Rite Aid has struggled to compete with its larger and better-funded rivals and has also faced a slew of litigation related to the opioid epidemic.

A Rite Aid store in Kingston, New York, on May 15, 2023.
Angus Mordant | Bloomberg | Getty Images

Rite Aid lost more than $1 billion in the months before it filed for bankruptcy, the failed drugstore chain revealed in a Wednesday regulatory filing, as it warned investors it may not be able to keep its business running.
The warning, which came three days after Rite Aid filed for bankruptcy protection, was contained in a late quarterly filing that showed the company racked up more losses in the 13 weeks ending Sept. 2 than it did during its entire previous fiscal year. 

During the quarter, Rite Aid posted $5.65 billion in revenue and a net loss of $1.02 billion, compared with $5.9 billion in sales and a net loss of $331 million in the year-ago period. 
Rite Aid’s cost of goods sold and its selling, general and administrative expenses were in line with prior quarters. But its interest expense ballooned to $72.7 million, up from $52.5 million in the year-ago period.  The company also took $310.8 million in facility exit and impairment charges, which largely came from asset write-offs at locations the company plans to close or relocate, the filing says. 
The drugstore has spent the past several years buckling under the weight of slowing sales, long-term debt and lawsuits alleging it oversupplied painkillers and contributed to the nation’s opioid epidemic. 
On Sunday, it filed for bankruptcy protection in New Jersey after a “confluence of operational and financial factors” left it with no other choice, court filings state. 
Rite Aid has about $4 billion in debt and pays about $200 million in interest annually, court records say. With about $93 million in cash as of Sept 2., those payments have left Rite Aid unable to execute its turnaround strategy.

The company is also too small to compete against its better-funded rivals CVS and Walgreens, which have both been leaning into health-care models as Rite Aid stayed true to its pharmacy and retail focus. 
Rite Aid warned its store footprint will get even slimmer with plans to close underperforming stores as part of the bankruptcy. It has sought court approval to close at least 154 stores in the near term and said more could come down the line.Don’t miss these CNBC PRO stories: More

Architecture firms reported a sharp drop in business in September, indicating that the commercial real estate market could experience more pain soon.
Commercial real estate has been hit with a double whammy: Return to office is slow and interest rates are high.

Construction workers erect a building in downtown Miami, Florida, on June 14, 2023. 
Jim Watson | AFP | Getty Images

Architecture firms reported a sharp drop in business in September, indicating that the commercial real estate market could experience even more pain in the next year.
The AIA/Deltek Architecture Billings Index dropped to 44.8 in September, the lowest score since December 2020, during the height of the Covid-19 pandemic. Any score below 50 indicates worsening business conditions. The score shows a growing number of architecture firms are reporting a drop in billings.

The index is a forward-looking indicator of demand for nonresidential construction activity — both commercial and industrial buildings. It aims to predict construction activity nine to 12 months out.
“While more firms are reporting a decrease in billings, the report also shows the hesitance among clients to commit to new projects with a slump in newly signed design contracts,” said Kermit Baker, AIA’s chief economist. “As a result, backlogs at architecture firms fell to 6.5 months on average in the third quarter, their lowest level since the fourth quarter of 2021.”
Commercial real estate has been hit with a double whammy. Return to office is slow, hitting both office buildings as well as the retail stores and restaurants that support them. Downtowns are suffering. But a sharp rise in interest rates has exacerbated the problem, causing investments and deal-making in most sectors to grind to a halt.
While all regions of the country are experiencing a decline, the West is deepest, as the return to office there has been slower than in other areas. Among real estate sectors, firms with a multifamily residential focus saw more of a decline. Multifamily construction boomed over the past few years, with a record number of units now flooding the market and putting pressure on rents.
Analysts, however, warn that the drop in apartment activity does not bode well for the future.

“I’ll say again, we do need to absorb a lot of multifamily construction currently in place but after that, there won’t be much for a few years after,” said Peter Boockvar, chief investment officer at Bleakley Financial Group.Don’t miss these CNBC PRO stories: More