Netflix Price Hikes Will Have A Hard Effect On Earnings

The analysts on Wall Street seem to be divided on the future of the world's largest streaming service company, Netflix.

During early trading on Monday morning, Netflix (NFLX) saw a dip of more than 2% down to $99.10 per share. The drop suggests that investors may be nervous about another post-earnings dip, according to USA Today.

From April to June, Netflix added 1.7 million subscribers, which was the company's lowest growth in two years. The streaming service saw its shares fall 13% down to $85.54 at the time, but now stocks have risen back to the $100 mark since then.

The Los Gators, California-based company recently announced that subscribers would be seeing a $2 monthly increase to the most popular streaming plan. The longtime customers were allowed to pay the lower price for two years since the company announced the price hike, but currenty all subscribers are now being forced to pay the higher rate.

Despite the concerns by many investors, Michael Pachter, the managing director of equity research at Wedbush Securities, expects a slightly better performance of 7 cents per share for Netflix's earnings forecast. Also, financial analysts are expecting revenues for the video streaming service of around $2.28 billion, which would be a 31% increase.

According to Pachter, Netflix's hit shows such as Stranger Things and Luke Cage "helped to drive subscriber retention and offset some of the negative impact from delayed price increases."

Considering that the price hikes and the subscriber numbers aren't growing at the rates they used to, one would think that Netflix would also offer as much material as they once did. However, this is also not the case.

Do you think Netflix's earnings are taking a big hit simply because of the price hike?

[H/T USA Today]