Video-streaming giant Netflix announced Tuesday that it is raising prices between 13 and 18 percent for new and existing customers. That’s the most substantial increase in its history. Following the announcement, the company’s stock shot up more than 6 percent.
If you had invested in Netflix in 2007, when it first began its streaming service, that investment could have paid off big time: A $1,000 investment would be worth more than $90,000 as of Jan. 15, according to CNBC calculations.
The platform faces competition from Amazon, Apple, Disney and, most recently, NBCUniversal, which either offer similar services or plan to launch streaming platforms and which could pull content, and potentially viewers, from Netflix.
“I think Netflix is in trouble when the big guys start coming after them,” Laura Martin, an analyst at investment-banking and asset-management firm Needham & Company, said in a previous interview with CNBC.
Still, investors remain generally optimistic about Netflix.
CNBC: Netflix stock as of January 2019
“The company’s investment in content, technology and distribution will drive subscriber growth well above consensus expectations, both in the U.S. and internationally,” says Goldman Sachs internet analyst Heath Terry.
And Justin Patterson of investment banking-company Raymond James upgraded Netflix’s stock to “strong buy” from “outperform.”
“We believe the combination of positive revisions and emerging signs of long-term profit potential will yield share price outperformance,” says Patterson, noting high viewer numbers for the popular original film “Bird Box,” as well as “Netflix’s advantages in film; convenience, cost, and global distribution.”
This is the fourth time the company has raised its subscription prices since it launched its streaming service, with the most recent in October 2017. Shares jumped 3 percent that day.
Wall Street analysts don’t think this price hike will be a deterrent, saying customers are likely willing to pay more. And, in the past, most fans have not been put off by higher costs. Last quarter, Netflix reported domestic subscriber growth of nearly 11 percent year over year, for a final total of 58 million U.S. subscribers.
In 2018, the company was the best performing of what are called the FAANG stocks: Facebook, Apple, Amazon, Netflix and Google.