The largest subscription streaming service company – Netflix Inc. – announced a surge by 18% after it managed to project customer growth that surpassed the analysts estimates. The company also revealed that it is considering the option of charging its new users more in order to share accounts.
Netflix Inc.s shares increased as high as $395 in extended trading after these results were announced. The companys stock gained 1.5% to $333.73 at yesterdays close in New York and was announced by Standard & Poors as last years top performer in their stock index.
Reed Hastings, who is the Chief Executive Officer of Netflix Inc. is said to be testing new pricing strategies, which are expected to increase the companys profit and revenue. Mr. Hastings is also focused in investing in the growth of Netflix in order to keep the companys lead ahead of its most serious rivals on the market, such as HBO, Amazon.com Inc. and Hulu LLC. Chief Executive Hastings has also resisted the investors calls to raise prices.
One of the analysts working for Wedbush Securities – Michael Pachter, commented on the companys current situation: “Management appears more confident than at any time in their history. Its either a sign that things are really great or that theyre starting to believe their own hype.”
According to a statement published on the companys website, 2.25 million new domestic subscribers were forecast by Netflix this quarter. Netflix also predicted a 48-million-dollar profit, or 78 cents a share for the first quarter of 2014. This is a bit higher than the analysts estimates of 75 cents a share.
Currently, the company is considering an alternative to raising the prices. In December 2013 it offered some new customers a 6.99-dollar starting plan. Chief Executive Officer Hastings said in a letter to the companys investors, cited by Bloomberg: “Eventually, we hope to be able to offer new members a selection of three simple options to fit everyones taste.” Mr. Hastings also said in an interview: “Were still searching and trying to figure out the best way to move forward. Current subscribers will get to keep their current plan and price for a generous time period.”
According to CNN Money, the current share price of Netflix Inc. is 1.53% up, and its one-year return rate is 9.35% down. The 26 analysts offering 12-month price forecasts for Netlix Inc. have a median target of 355.00, with a high estimate of 460.00 and a low estimate of 122.00. The median estimate represents a +6.37% increase from the last price of 333.73.
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