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Netflix's Price Increase: Good In More Ways Than One

Netflix announced that it will increase the price of its standard service for new subscribers by $1.00. Historically, this has not impacted subscriber growth directly.

The company has promised to grow net subscribers by 5-6 million annually in the coming years, which will become a reality if it can cut down on subscriber loss.

I propose an idea that would cut down on subscriber loss and give Netflix users a reason to stay subscribed for at least one extra month.

I recently read an article that admonished investors from by Netflix (NASDAQ:NFLX) due to its "nose-bleed valuation" and a few other metrics. I was quick to comment that this is by no means a way to evaluate every company under the sun, as some stocks simply do not trade on valuation.

Netflix's price action in Thursday's trading session serves as the perfect example. On news that it would charge new customers $1.00 more per month for its standard streaming service, NFLX spiked from $103.00 to $107.50 in the blink of an eye. This momentum carried into the close, with NFLX eventually ending the day at $114.93 This was a 12% move in a matter of hours, all on claims that the company...