The Price Increase Won't Affect Netflix, Inc. Stock ... Yet

New users will have to pay a little more for the streaming service. Over the long term, that’s likely to be good for Netflix, Inc. stock.

Apr 26, 2014 at 9:00AM

For once, Wall Street has it right. A price increase on new subscribers is bound to be good for owners of Netflix (NASDAQ:NFLX) stock. Fool contributor Tim Beyers explains why in the following video.

First, let's review what we know. Netflix plans a $1 to $2 price increase, varied by country, sometime later this quarter. Existing subscribers will be "grandfathered" in at the existing price for a "generous" period of time -- likely in line with the two-year grace period already in effect in Ireland.

Revenue won't jump in the near term as a result of this change. Rather, it'll be a slow, staged progression that allows Netflix to preserve its installed base while continuing to pursue rapid subscriber growth overseas. (The company has added more than 5 million foreign members over the past 12 months, a 78% increase year over year.)

The move comes on the heels of announced commitments to new original programming -- notably, the comedy Grace and Frankie, starring Lily Tomlin and Jane Fonda -- and follows's previously announced price increase on all Prime members.

Most important, Tim says the hike allows Netflix to grow profits without introducing gimmicks that would attract the ire of partners, such as special rental deals or premium one-offs. Instead, the business will stay true to what it's always promised customers: a simple mix of popular, obscure, and exclusive content for a reasonable monthly fee, increasingly delivered via the Internet.

Now it's your turn to weigh in. What's your view of Netflix's price hike? Will you continue to subscribe? If not, why not? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short Netflix stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends and owns shares of and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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