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Netflix raises prices for U.S. subscribers
Prices for its popular standard plan, which allows streaming on two devices at the same time, will rise to $12.99 per month from $10.99, the company said in a statement.
Netflix shares rose 7 percent to $356.11 in afternoon trading, adding to their 30 percent rise so far this year.
The company`s top-tier plan, which allows streaming on four screens in high definition, will increase to $15.99 from $13.99 per month, while the fee for its basic plan will rise to $8.99 from $7.99.
In comparison, AT&T Inc`s
"It highlights that Netflix has pricing power and even after the increase it remains a very cheap entertainment alternative," Pivotal Research Group analyst Jeff Wlodarczak said.
Netflix has been spending billions to bolster its original content, which boasts award-winning shows such as "The Crown," "Black Mirror" and "Wild Wild Country" to fend off intensifying competition from players such as Amazon.com`s
The price hikes are expected to fetch Netflix hundreds of millions of dollars, ahead of the launch of streaming services from AT&T and Walt Disney Co
While aggressive spending - a planned $8 billion in 2018 - has led to a surge in subscriber growth, its debt doubled to $6.50 billion in 2017 from $3.36 billion in 2016.
The company is expected to have a debt level of $8.33 billion in 2018, according to Daniel Morgan, senior portfolio manager at Synovus Trust Co, which owns 15,019 shares of Netflix.
Netflix is scheduled to report its fourth-quarter results after market close on Thursday.
"With Netflix frequently tapping the debt markets on several recent occasions, the price hike could help ease concerns with a growing deficit on free cash flow to fund a likely continued escalation in Netflix`s content spending, which likely topped $13 billion in 2018," CFRA analyst Tuna Amobi said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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