Loading...

MORGAN STANLEY: Netflix is benefiting from a virtuous circle (NFLX) from Ayman's blog

stranger things netflix

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 for the fourth quarter is also promising, with "Stranger Things," "The Crown," and "Punisher" coming to viewers soon.

The company recently signed a roster of creative talent with the likes of Shonda Rhimes and David Letterman, which will also prop up the company`s price. 

Swinburne did have some warning words. He believes that Netflix`s reliance on third-party content may come back to bite it as US studios shift toward their own direct-to-consumer models as Disney did. US studios are also moving to licence their content to other competitors, such as Hulu. 

However, the company is making its own shift to self-producing exclusive original programming that "supports its growing pricing power," Swinburne said.

Netflix stock is trading at 195.25 with a 53% gain over the year.

To see why Netflix`s price raise might have been the best thing it`s done, click here.

SEE ALSO: One chart shows why shareholders are so happy about Netflix`s price increase

Join the conversation about this story »

NOW WATCH: Debating the odds of a stock market correction


Share:
Previous post     
     Next post
     Blog home

The Wall

No comments
You need to sign in to comment

Like Us On FB

Follow Ayman

Blogger Tricks

Blogs

Ayman Admin
The first clinical trials are slated to begin in t... more
Ayman 10 minutes ago
Ayman Admin
CAIRO - 16 December 2017: Jerusalem has been an Ar... more
Ayman 10 minutes ago
Ayman Admin
ABU DHABI - 16 December 2017: UAE Minister of Stat... more
Ayman 10 minutes ago
Ayman Admin
CAIRO - 16 December 2017: Minister of Foreign Affa... more
Ayman 40 minutes ago
Ayman Admin
CAIRO – 16 December 2017: Egyptian Presiden... more
Ayman 40 minutes ago
Ayman Admin
NEW DELHI (Reuters) - India`s ruling Bharatiya Jan... more
Ayman 40 minutes ago
Ayman Admin
CAIRO – 16 December 2017:Russia and Egypt ar... more
Ayman one hour ago
Ayman Admin
CAIRO – 16 December 2017: Minister of Civil ... more
Ayman one hour ago
MrPc Vip
Passengers are enduring delays in blacked-out term... more
MrPc one hour ago
Ayman Admin
Amy Wright, who employs 40 people with disabilitie... more
Ayman one hour ago

null

www.there.com

Groups

Unity3d
4 members
FaceBook
8 members
Cats
9 members
Egypt
17 members
Twinity
17 members
There.com
25 members
Free website traffic to your site!

Donate

Google this