A video-streaming service provider called Netflix is boosting prices by a buck for some services. It is safe to say customers will not rejoice at the thought of paying more for their next hit of Stranger Things or Dare Devil. As the contrary, the investors would love the idea. Apparently, the shares of Netflix raised up by about 7 percent when news of the price heard by public out on Thursday.
The share price of Netflix opened around $185. A few moments later, there was an improvement. It jumped as high as $192 on the news. At the noon ET, the stock was trading close to $191.
The positive reaction of Netflix suggests the market to believe that the price hike will not lead a lot of customers of Netflix to bail on the service. The thing is that the stock is in good shape prior to its Q3 earnings report. The report itself will come out on October 16.
Every single investor of Netflix is confident that subscribers of Netflix will stick around. This one is likely due to the fact that the $1 price hike only applies to its higher priced subscription plans. Someone named Don Reisinger explains that Netflix has increased the price on two of its three subscription tiers. The standard plan which allows the customers to watch content on two screens at the same time has been jumped from $9.99 per month to $10.99 pr month.
The most favorite plan which is called premium plan allows for four streams and access to higher resolution content. It has been raised up from $11.99 per month to $13.99 per month. Fortunately, the basic plan that offers the single screen streaming remains the same at $7.99 per month.
The multi-tier plans are the reflection of the success of Netflix at developing the incremental revenue streams even the market of streaming video is at risk as there are a lot of competitors appearing each day including Amazon which steps up its game.
Some people believed that the growth of Netflix has reached its peak. On the other hand, the company delivered the surprise last quarter. They did it by adding 1.07 million subscribers in the United States. It is probably the highest Q2 jump since the year of 2011. The good news is that the overseas growth remains strong as the company also added 4.1 million customers in non-United State markets.
All of the things mentioned above have contributed to the remarkable 2017 for Netflix. It has seen the Netflix share price increase approximately 65% since the first month of the year which is January.
Every user who has been the subscriber of Netflix for a long time knows, however, that the stock can be changed easily. When Netflix as the company misses the targets of Q3, then the news of the share price will increase. In fact, this thing will not be reflected in this quarter’s earnings. It will unlikely stave off the big drop.