Netflix Inc (NASDAQ:NFLX) increased its subscription prices Friday, nearly a week before the stream giant reports earnings for the fourth quarter. Investors are craving for how many subscribers the company added during this period as its stock price jumped upon the pricing move.
As reported by CNN Business, Netflix rose its subscriber prices and will present its Q4 earnings report on Thursday, all happening in less than a week. Investors and the rest of the streaming business are intrigued by the change in prices.
Andrew Hare, a senior vice president of research at media consulting firm Magid, said, “They clearly believe they still have the pricing power to do so and that they provide an exceptional value for the money.”
Since both the U.S. and Canadian markets are now in a mature stage, the company wants to increase its average revenue per user (ARPU) and hence offset growth.
"Pressure is on to drive overall growth, generate positive cash flow, all while keeping up with rising product costs and competition. Raising prices is just one lever they can continue to pull right now, though I'm not sure for how much longer."
On Friday, Netflix increased the price of the U.S. standard plan by $1.50 to $15.49, and the basic plan by $1 to $9.99. The premium plan saw the biggest increase —$2 to $19.99.
In Canada, the price for the standard plan increased by $1.50 to $16.49 Canadian, while the premium plan swelled $2 to $20.99 Canadian —no raise was announced for the basic plan.
Netflix’s stock went up almost 2% on the move, which caught the eye of investors.
Rising prices could obey to the stultified growth of Netflix in both the U.S. and Canada, its biggest markets, as according to Mark Zgutowicz, a senior analyst with Rosenblatt Securities, expansion there has “waned over the past several quarters.”
He further said: “We're estimating that Netflix will spend $17 billion this year globally and that's off $12 billion in 2020, which happened to be a down year because of Covid.”
Netflix’s price move could have a strong effect on the streaming business and its competitors like Disney+, HBO Max, Peacock+, and Paramount, which could all increase their prices too.
Netflix is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.