Netflix posted earnings that edged past Wall Street expectations Monday, while revenue was largely in line. In addition, the company said it will increase membership costs for new subscribers starting later in the quarter. Momentum names such as Netflix have been on a rollercoaster ride in recent weeks, as investors fled from high-flying stocks. The movie-streaming company posted earnings of 86 cents a share on sales of $1.27 billion.
Last week in my post about Netflix paying Comcast for a peering arrangement I said of the cash Netflix is paying out: “…at some point you know they’re going to start passing on these costs to consumers.” ‘At some point’ turns out to be later this quarter. In it’s Q1 2014 Letter to Shareholders Netflix announced it is going to raise prices “one or two dollars” depending on country. The good news is that the increase for now will be limited to new customers; existing customers will be grandfathered for “a generous time period.” In the same paragraph the company points out that when they raised prices in Ireland it grandfathered existing customers for two years; that seems to be setting expectations for the amount of time existing users will get for this price hike as well.
