The streaming media giant is raising its U.S. monthly subscription prices by 13% to 18%, according to CNBC, its largest increase ever and the fourth time it's increased prices in the U.S. since it started its streaming service 12 years ago. The last hike came in 2017.
Shares of Netflix closed up 6.52% at $354.64 Tuesday. Netflix shares are already up almost 30% this year.
The increases are the first time that price increases will affect all U.S. subscribers, which numbered 58 million at the end of September.
Netflix's most popular U.S. plan, which offers high-definition streaming on up to two devices simultaneously, will increase in price from $11 to $13 per month, according to CNBC, while the cost of the most basic plan will increase from $8 to $9 a month. The cost of a premium plan for ultra-high definition video will rise from $14 to $16 per month.
The price increases will go into effect immediately for new subscribers, and will be rolled out to current customers over the next three months. Customers in Latin America that are billed in U.S. currency will also see price increases, with the exception of Mexico and Brazil.
Netflix is spending billions of dollars on original content as it seeks to lock in new subscribers around the world. Rivals such as Disney (DIS) - Get Report and AT&T (T) - Get Report are set to launch their own streaming media services soon, and Apple (AAPL) - Get Report is widely expected to do so as well.
Netflix burned through about $3 billion in cash in 2018 and has said it expects to do the same in 2019. It has been borrowing heavily to finance its spending on new content.
Netflix reports fourth-quarter earnings on Thursday after the close (TheStreet will be live blogging the release and event with investors; please check our home page then for details).
Disney and Apple are holdings in Jim Cramer's Action Alerts PLUS member club. Members of Cramer's Action Alerts Plus club can watch Cramer's exclusive call on Thursday, Nov. 17.