Netflix Increases Subscription Prices Ahead Of Q4 Earnings R...| MENAFN.COM

Monday, 16 May 2022 02:22 GMT

Netflix Increases Subscription Prices Ahead Of Q4 Earnings Report

(MENAFN- ValueWalk) Jade87 / Pixabay

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.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q4 2021 hedge fund letters, conferences and more

Seth Klarman's 2021 Letter: Baupost's“Never-Ending” Hunt For Information

Baupost's investment process involves 'never-ending' gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More

Increasing ARPU

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.'

New Prices

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.

Updated on Jan 20, 2022, 9:40 am


Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.