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Neflix Raises Prices for US Subscribers, Stock Soars 6%

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Jan. 15 2019, Published 11:44 a.m. ET

Netflix raises prices for US subscribers

Netflix (NFLX) recently announced that it was raising prices for its US subscribers by 13%–18%. The increase reflects a steep rise—the biggest in the 12 years since Netflix started its streaming service.

Netflix has increased its prices for US subscribers four times in the United States, with the last rise coming at the end of 2017. The company’s most widely adopted plan is set to see the highest increase from $11.0 per month to $13 per month.

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The most popular plan offers high-definition streaming on up to two separate Internet-connected devices at the same time. Compared to HBO’s streaming plan’s cost of $15.0 per month, Netflix’s revised higher prices still appear to be on the low side. The company intends to raise the price of its cheapest plan to $9 per month. The price of its premium plan, which offers an ultra-high definition service, will rise $2.0 per month to $16.

Netflix’s stock movements compared to its peers’

Today, Netflix opened at $349.60, up 5% from yesterday’s closing price of $332.94. The stock touched $354.96, up 5.8% from its previous day’s close, in the first hour of trading. The company is scheduled to release its fourth-quarter earnings results after market hours on January 17. Netflix’s peers (QQQ) Comcast (CMCSA), Amazon (AMZN), and Charter Communications (CHTR) were up 0.11%, 1.45%, and 0.03%, respectively, in the first hour of trading today.

Netflix’s US subscribers

At the end of September 2018, Netflix had 58 million subscribers in the United States. The company expects its total US memberships to be 60.3 million and its net additions to be 1.8 million in the fourth quarter of 2018. The cash it garners will go toward lowering NFLX’s heavy investments in original shows and films and repaying its huge debt.

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