Date: 16 Jan 2019
Netflix’s stock price soared higher on Tuesday, as the United States streaming giant announced that they would be raising the price of their subscription fee. Wall Street investors cheered Netflix’s decision to raise the price of all of its subscription models, as it was seen as a way to raise revenue for further investment in the companies content creation programme.
The companies most popular subscription service is the $11.00 plan, the proposed hike would take the subscription fee to $13.00, marking an overall increase of 18%. Analysts projected the increase would spark any significant decrease in users which helped Netflix’s stock close the trading session higher by 6.52%.
The streaming giant’s stock price has seen a bullish start to 2019, with Netflix Inc now trading above $350.00 after previously falling to $233.88 on December 24th last year. The stock still trades some way from its all-time high of $423.21, although analysts still expect to see earnings growth of 53.73% over this year’s forecasted earnings.
Now that Netflix has announced a hike in subscription prices Wall Street is already speculating that there is scope for more subscription increases down-the-road, given that the most popular subscription fee of $13.00 still offers significant value to customers.
The subscription price increase by Netflix helped to raise the stock price of Amazon and Apple on Tuesday, as investors quickly identified the two companies as having service revenue streams that could also be raised, specifically Amazon Prime and Apple Music.
NFLFX.US Daily Candlestick Chart. Source: ActivTrader Platform
Technically, the next major upside resistance levels for the Netflix stock are the $380.00 level and $400.00 level, before we reach the all-time price high, which was achieved in 2018. The $380.00 level was the last significant swing-high, before the major drop seen in December, while the $400.00 level presents a clear psychological benchmark prior to the $423.21 level.
Failure to surpass the $380.00 and $400.00 levels may see short-sellers testing towards the stocks 100-day moving average once again and possibly a deeper retrace towards $300.00 support zone.
Written by Nathan Batchelor, External Analyst
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