According to a report published by Reuters, Netflix, Inc. (NASDAQ: NFLX) has increased the price of its monthly subscription in the U.S. and Canada to pay for new programming in a bid to boost its competitive edge.
In the U.S., the price of the standard plan has increased from $13.99 to $15.49 per month, while in Canada, the plan costs C$16.49, up from C$14.99.
The standard plan allows two streams at the same time.
A Netflix spokesperson said, “We’re updating our prices so that we can continue to offer a wide variety of quality entertainment options. As always we offer a range of plans so members can pick a price that works for their budget.”
For the premium plan, which allows four simultaneous ultra HD streams, Netflix has raised the monthly price by $2 to $19.99 in the U.S. The basic plan, which allows a single stream, now costs $9.99 per month, reflecting a $1 hike.
In Canada, the price of the basic plan remains unchanged at C$9.99 per month, while the premium plan now costs C$20.99, up from C$18.99.
Last year in April, the streaming giant announced that it would spend $17 billion on content in 2021. However, the spending for this year has not been revealed yet.
Netflix’s upcoming earnings release for the fourth quarter of Fiscal Year 2021 is scheduled for January 20, 2022.
Shares of the company closed 1.3% up on Friday at $525.69.
Wall Street’s Take
Last week, Goldman Sachs’ (NYSE: GS) analyst Eric Sheridan reiterated a Hold rating on the stock but lowered the price target to $580 from $595 (10.3% upside potential).
In a note to investors, Sheridan said, “While we remain highly confident in a strong content slate (with that trend beginning in Q4 ’21), we see content as less of a dramatic driver of gross addition trends in coming quarters and likely an element of the broader industry pricing and competitive dynamics that could contribute to a mix of the rate of change in revenue and margin trends in the years ahead.”
Additionally, John Hodulik, an analyst with UBS (NYSE: UBS), maintained a Buy rating on Netflix and reduced the price target from $720 to $690 (31.3% upside potential). Hodulik has lowered the net additions projection for the fourth quarter to 7 million, compared to the earlier expectation of 8.9 million and the company’s guidance of 8.5 million.
Loop Capital Markets analyst Alan Gould also reiterated a Buy rating on the stock with a $700 price target (33.2% upside potential).
Gould said, “We understand the rotation out of the high price to sales stocks with rising interest rates, but NFLX’s stock price is no longer predicated on discounting earnings way in the future, the stock now sells at just 30x next year’s earnings, close to the same multiple as Walt Disney (NYSE: DIS).
Price Target
Overall, the stock has a Moderate Buy consensus rating based on 23 Buys, 5 Holds and 3 Sells. The average NFLX stock forecast of $662.93 implies 26.1% upside potential. Shares have lost 12% year-to-date.
Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into Netflix’s performance.
According to the tool, compared to the previous year, Netflix’s website traffic registered a nearly 27% decrease in global visits in December. However, the website traffic has increased 6.8% year-to-date against the same period last year.
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