New price increases for Netflix (NFLX) subscribers could boost sales, analysts say.
The streaming company announced late Thursday that it will increase its standard membership fee by $ 1 to $ 14. Premium will increase by $ 2 to $ 18. The changes will be introduced in the next two months.
Jefferies analyst Alex Giaimo estimates that price increases could boost Netflix sales by $ 500 million to $ 1 billion in 2021. Given Netflix’s strong content, Giaimo doesn’t believe the company is at risk of losing significantly number of subscribers due to price increases.
Netflix last raised prices in January 2019, but managers have hinted strongly in recent calls for profits that an increase is looming. So this week’s news is hardly a surprise to the street. In January 2019, Netflix’s service, which offers two streaming devices, rose to $ 13 from $ 11. A cheap plan of $ 8 a month reached $ 9, and a high-end version went to $ 16 from $ 14.
Shares of Netflix have risen 55% so far, surpassing the Nasdaq Composite’s earnings by 25%.