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Netflix Paying a Price for Recent Price Hike; Analyst Says Company Miscalculated

Jul 26, 2011  •  Post A Comment

Netflix warned that its recent price hike is leading to a slowdown in subscriber growth, reports Bloomberg. The company expects just 401,000 new subscribers this quarter, a fraction of the 1.8 million added in the previous quarter, the story says.

“Netflix miscalculated on this one, and are basically saying all our growth is going to be absorbed by people who quit,” said Wedbush Securities analyst Michael Pachter. "It’s not clear how successful they’re going to be at attracting and retaining people with these new pricing plans.”

As previously reported, scores of Netflix customers have criticized the streaming video and DVD rental service’s decision to raise some bills by 60%.

On a conference call, Chief Executive Reed Hastings said he "feels bad" some customers are angry about the price hike, but he defended the jump by saying it will help Netflix license "amazing new content," according to the piece.

Shares of Netflix fell as much as 10% in German trading. The company issued a forecast that its third-quarter sales and profit would fall below analysts’ forecasts, the piece notes.

One Comment

  1. Chief Executive Reed Hastings said he “feels bad” some customers are angry about the price hike.
    “I’m sorry that the stock price drop will delay my purchase of a new private jet by six months.”

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