Netflix (NFLX) Price Increase Spurs Stock Rally
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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Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don