Analysts Prove Favorable To Netflix Price Increases

On the heels of Netflix raising its prices for all its consumer plans, the subscription video-on-demand service posted a sharply higher stock price.

At the same time, some potential competitors witnessed slightly lower or weak results.

Netflix stock was 7% higher in early Tuesday trading to $356.13.

Pricing plans rising will rise 12.5% for the Netflix basic plan; 14.3% for the standard plan; and $18.2% for Netflix premium service. Netflix prices for its basic plan will climb to $8.99 (from $7.99); standard membership to $12.99 (from $10.99); and premium to $15.99 (from $13.99).

Analysts are buoyed by Netflix's new pricing -- seemingly modest compared to other digital TV service alternatives. They are not expected to impact key growing estimates for subscribers.

A note from media analyst, Neil Begley, senior vice president, at Moody’s, read: "We don’t believe it will slow subscriber growth, as the new price points remain competitive relative to Netflix's volume of original and licensed content. We still believe Netflix will reach 200 million total paying subscribers in 2021, and we forecast the company will achieve break even free cash flow by the 2022-2023 time frame."



Todd Juenger, media analyst at Bernstein Research, said: “We believe Netflix is simply ‘not leaving money on the table.’ Collecting easily earned revenue from a service whose consumer perceived value far exceeds its price -- with minimal expected impact on subs and net adds.”

Netflix currently has 57.4 million U.S. subscribers and 72.7 million international accounts.

The company spent $8 billion on content in 2018, with estimates it could spent up to $10 billion to $12 billion this year. Around 85% of this year’s spend is estimated to be for original programming.

Netflix is facing growing competition from traditional media companies launching big OTT platforms, including one from Walt Disney, WarnerMedia, and NBCUniversal.

Tuesday trading of Walt Disney was down 1% to $111.34, while AT&T was down 0.5% to $30.47. Comcast Corp was virtually flat -- up 0.1% to $35.79.

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