He price increase is never good news in any sector, except for firms that have the pricing power. Netflixannounced last week increasing its premium, standard and ad-supported subscriptions in the US to $26.99, $19.99 and $8.99 respectively. This is not exactly the best time to make increases considering the inflationary pressures on consumersbut it could be a test offuego about the trust that investors have about the firm.
According to data from The Motley Foolthe last time there was a price increase was in January 2025.
The cost per add external users to the home group increase to $9.99 for users without ads and $6.99 for users with ads.
Why is it a trial by fire?
The price increase could be a show of trust that Netflix will continue to be the chosen one among its customers. Even if it is expensive for them, they can switch to a cheaper plan and not leave the service permanently.
Additionally, since the war on shared passwords and the ad-supported plan, Netflix has seen a virtually uninterrupted subscriber growth. Their margins and profitability have also skyrocketed, going from a growth focus of sales to one of profitability.
Therefore, investors and analysts focus more on the net results that in the amount of new subscribers.
If the number of subscribers remains stable after the increase it could mean that consumers consider it a basic consumer product like an iPhone.
However, if the loss of subscribers exceeds the income of the remaining subscribers, it could be a sign that the American economy is reaching a turning point. Since consumer spending represents the 70% of US GDP.
What do the analysts say?
According to Tipranks, Netflix has the review by 41 analysts divided into 30 buys and 11 hold. The average price target is $113.97, with a high of $150 and a low of $94. This average price target represents a variation of 18.53% from the last price of $96.15.
Laura Martin, analyst de Needhamrecommends comprar with a target price in 120 dollars.
Steven Cahall, Wells Fargo analystrecommends keep with a target price in 105 dollars.
Netflix It closed on Tuesday higher at $96.13. The 70-period moving average is below the last twenty-three candles, RSI is up at 61 points and the MACD lines are above the zero level.
Medium-term resistance is at $100.19. Meanwhile, Ei indicators are mixed.