Netflix (NFLX) Price Increase Spurs Stock Rally

Chart of Netflix (NFLX) Subscriber Price Increases vs NFLX Stock Price
Chart of Netflix (NFLX) Subscriber Price Increases vs NFLX Stock Price – Source:

As we heard all day on Tuesday, Netflix (NFLX) just announced that it will be raising subscription prices on its streaming service by more than it’s ever raised them before. And what did investors do in response? They bought NFLX stock in droves, of course. Two days ahead of Netflix’s earnings release on Thursday, the company strategically announced this substantial price increase. And investors cheered the decision, assuring the company that the market will undoubtedly bear higher prices ($12.99/month, in this case) for Netflix’s popular service.

In fact, NFLX stock has somewhat of a history of rallying after price increases are announced. The chart above shows the last three subscriber price hikes (often announced shortly before earnings, as was the case on Tuesday), and how the stock rallied shortly after each of them. There will very likely come a time when Netflix price hikes may not be so welcomed by Wall Street. But apparently, that time has not yet come.

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Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.

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