You may or may not have heard, but Netflix is raising their subscription prices across the board. The cheapest option will now be $9 per month, and the regular plan will be $13, and the ultra-premium plan will be $16.
We have had Netflix for a long time, but I often find little to watch on there. My wife likes some of the kids options and you can download shows to take while you are not online, which is really helpful for car rides. It seems though, that whenever I want to watch a particular movie, it is not on there. Perhaps I am using it wrong – I should surf the program for something to find, instead of wanting to see something and then looking?
Regardless, the stock (ticker NFLX) has been soaring on the news of the price increase. I have never invested in Netflix – the valuation is just too high based on the company’s operations and results, so any bad news or if it falls out of favor, the stock will be a bloodbath. The current value of the company is $154 Billion, and their revenues are only $15 billion so they are trading at 10x revenue (as a comparison point, the S&P 500 index holdings trade at a price to sales ratio of 2.03, so Netflix is 5 times more expensive). Netflix has been profitable as of late, but the profits are still not even close to what they would need to be to support the current valuation (trading at a price to earnings ratio of 125, while the S&P 500 index holdings trade at a price to earnings ratio of 20, so this is 6 times more expensive).
Personally, I will not invest in the stock, and the price increase in the subscription product is making me reconsider…
What is your take on Netflix as a subscription service and Netflix as an investment?
Thanks for coming by today!
Brian
Me neither
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Wow so the cheapest HD plan is $13. That is incredibly crazy considering that on Black Friday Hulu had a $1 per month plan so for this entire year I'm paying $1 a month for Hulu. I was also sent an email from Starz for $1 a month for six months, so I have six months of them for $1 a month.
Now Netflix wants to charge $13 a month? I never find much to watch on there, and I'm usually bored within a couple of weeks after I join them and then cancel.
Maybe they should come up with a two-week plan for seven bucks.
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There are definitely services that although they are part of our life and we can not stop using them and we are victims of paying a lot.
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If their services matches the bills
Then users are ready to pay to get entertained. Although i am not patron of theirs. I feel they offer quality.
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Netflix is one of most popular source for entertainment. But I have no idea to invest in Netflix. But I learn some valuable information about Netflix from your excellent article.
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It is always good to invest and more if it is in such a stable and popular business.
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