Netflix Has Ability to Raise Prices: Survey

The results are a positive sign for the streaming giant as it continues to spend heavily on content.
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A majority of Netflix  (NFLX) - Get Report users in a recent survey said they would be willing to absorb a price increase to continue the service. The findings are a positive sign for the streaming giant as it continues to spend heavily on content and competition rapidly increases.

Piper Sandler conducted a survey of 1,100 U.S. Netflix subscribers and asked how much more they would pay for Netflix. The weighted average amount respondents would be willing to absorb was an increase of $2.40 a month. The most popular tier of Netflix service in the U.S. currently costs $13 a month.

While the investment bank doesn’t expect Netflix to raise U.S. pricing this year, it does believe the streaming giant is likely to increase pricing in the next 12-24 months. And it views the May launch of AT&T’s  (T) - Get Report HBO Max, which will cost $15 a month, as making it easier for Netflix to increase its monthly subscription cost, given that it sees HBO Max as the most similar standalone streaming service to Netflix.

Assuming some degree of price increases and an accompanying rise in churn of existing U.S. and Canadian subscribers, Piper Sandler estimates that Netflix EPS would be approximately $10.00 for 2021, compared to current consensus estimates of $8.42.

Piper Sandler reiterated its overweight rating and $400 price target on Netflix.

Shares of Netflix were rising 0.4% to $370.08 on Tuesday morning.