Amazon.com (NASDAQ:AMZN) has now made it official: The company has raised the price of its Amazon Prime membership service from $79 a year to $99 a year. Amazon had initially suggested that such a possible price increase could be anywhere from $20-$40, but in this video from Thursday's Investor Beat, host Chris Hill and Motley Fool analyst David Hanson discuss why it wasn't the fact that the increase came in at the low end of this range that caused the stock to rise a bit on the news.
David points more to the idea that this just simply means more cash flowing into the business. While some have compared this to the Netflix debacle, where it raised rates and consumers fled, Amazon's incredibly robust moat means it has more than enough brand strength to raise rates without losing Prime members. However, while David notes that this will be an incremental boost to the company's bottom line, he won't be buying just on this news alone.
Chris Hill owns shares of Amazon.com. David Hanson has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.