It’s virtuous circle.
Netflix has moved to raise prices on its subscription plans, which will give it the resources to push further into global markets and expand its exclusive content. That, in turn, is likely to increase its pricing power even further.
That’s the crux of a research note from Morgan Stanley’s Benjamin Swinburne. The analyst lifted his price target for the company to $225 from $195, a 15% increase.
This month, the company announced that it will raise prices on its standard and premium plans to $10.99 a month from $9.99, and $13.99 from $11.99, respectively.
“Netflix’s recent price increases in the US and abroad are a positive indication of its confidence in the subscriber opportunity ahead and should help fuel content investments for future growth,” Swinburne wrote.
Though Netflix received some churn when it raised prices in 2016 on “grandfathered” plans, the company has seen many users who dropped their plans come back to the fold. Those “re-joins” have also driven the upside for the company this year, Swinburne said.
Netflix’s high-quality content gives its pricing power an additional boost. Swinburne points out that Netflix has enjoyed a seasonally strong quarter for viewership and that its slate of content …read more
Source:: Businessinsider – Finance