Netflix shares soar after record price hike

Netflix shares soar after record price hike

Netflix is introducing its biggest ever price hike for US customers as it tries to recover some of its heavy spending on original programming. 

The cost of a subscription to its most expensive “unlimited” streaming package will rise from $11 to $13 a month, a rise of 18pc. Its cheapest service rose from $7 a month to $8. The company said the price rise did not apply in the UK, where membership fees ranges from £5.99 to £9.99 a month. 

Shares in the company rose as much as 6pc on the news.

Netflix’s ability to increase prices while maintaining its 150m-strong audience is seen as a key factor in justifying the company’s $150bn valuation. 

Credit agency Moody’s recently said that raising prices was crucial if the company were to manage its mounting debt, which has doubled since 2014 as it funds original series such as The Crown, Stranger Things and Black Mirror.

The company is finding itself in an increasingly crowded streaming market, with Disney set to withdraw its content this year and launch its own service.

Analysts at RBC Capital Markets said the price increase would “generate a material boost to Netflix’s profitability”. 

The new prices will go into effect immediately for new signups, with existing customers receiving the price rises over the next three months.

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