The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers – far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

“We had a plan to reaccelerate growth and we delivered on that plan,” Netflix co-CEO Ted Sarandos said during a video call discussing the results.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

Netflix co-CEO Greg Peters predicted the company’s ad sales will double during the next year while remaining a just a sliver of total revenue that will continue to be propelled by subscription fees.

“We’ve got a lot of work ahead of us,” Peters said in a video call with investors. But he predicted Netflix’s foray into ads would eventually prove to be as successful as its recent crackdown on password sharing was.

Although he was impressed by most of Netflix’s report, Forrester Research analyst Mike Proulx called the slowdown in subscriber growth “concerning,” especially in the U.S., where the company is finding it increasingly difficult to attract more viewers.

“That’s why accelerating growth via advertising becomes paramount to Netflix’s go-forward strategy,” Proulx said.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

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A top retail stock to own this year has undoubtedly been Costco Wholesale (COST 0.92%). Its shares are up more than 35% since January as it has been hitting new all-time highs along the way. Not only is it a stable investment given its extremely popular warehouses, but the company has also continually found ways to grow its business.

You might think that with the stock now trading at more than 50 times earnings and the economy potentially heading for a slowdown, shares of Costco Wholesale may be approaching a peak, finally. But there’s reason to remain bullish on the stock not just this year but for the long haul, as one area of its business has been booming for a while.

E-commerce sales are a huge opportunity for Costco

When you think of buying something online, odds are you’re going to go to either Amazon or Walmart. But Costco has the potential to be a big player in that arena as well. The company doesn’t separate its e-commerce sales when reporting quarterly numbers, but it does highlight the growth rate.

And on a monthly basis, the company has consistently been growing online sales by double digits. Below is a table of Costco’s comparable sales growth rates this year, by month, looking at both the total company sales and just e-commerce.

In every single month thus far this year, Costco’s online business has generated comparable year-over-year revenue growth of around 15% or better. And it has routinely been a top-performing part of the business. The company’s logistics business has been a key piece of that puzzle as the company reported that in its most recent quarter, which ended on May 12, deliveries through Costco Logistics increased by 28%.

The company remains a growth machine

Costco has demonstrated its versatility time and again over the years. During the early stages of the pandemic, its warehouses were crucial for consumers looking to load up on essentials. And it has done well amid rising inflation, as buying in large quantities helped customers keep their costs down on a per-item basis. Meanwhile, in the long run, a huge opportunity looks to be emerging in e-commerce.

And with the company’s business generating a lot of cash flow, it has plenty of resources it can put into its e-commerce operations and logistics business. In the trailing 12 months, Costco’s free cash flow totaled $7.4 billion. While it has been expanding into new markets and launching additional warehouses, e-commerce can provide Costco with yet another catalyst to exploit.

Is Costco Wholesale stock a good buy right now?

Costco’s stock may appear as though it’s running out of room to rise higher. But given how well the business has been performing of late, it wouldn’t be surprising if the company posts another solid quarter when it reports fiscal fourth-quarter results later this month. Consumers continue to see a lot of value from the retailer, and there’s still much more revenue growth on the horizon.

The stock does trade at a hefty premium to earnings, which implies a lot of future growth is already priced into its valuation, and that could limit its gains in the short term. If you’re not prepared to hang on for at least a couple of years, you may be better off investing in other, cheaper growth stocks. But with its business generating solid single-digit growth and many opportunities still out there for the company, it’s certainly not too late for long-term investors to load up on Costco’s stock.

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