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Netflix Shares Surge to Record High as Investors Cheer Price Hikes

Thanks to its latest price hikes, Netflix Inc.  (NFLX) might have more than $1 billion in additional funds next year — and even more in the following years — to bolster its already-giant content budget with if it wishes. And in doing so, it may put more distance between its streaming library and those offered by a growing stable of rival services backed by media incumbents.

Netflix’s action does come with one meaningful risk: It’s further increasing the price premium its services carry (both directly and indirectly) relative to Amazon.com Inc.’s (AMZN) Prime Video. But for now, one has to assume that Netflix’s very data-driven management team did its homework before signing off on the move.

Starting in November, the price of Netflix’s Standard U.S. streaming plan, which supports up to two simultaneous HD streams, will be increased by $1 per month to $10.99. The price of its Premium U.S. plan, which supports 4K content and up to four simultaneous streams, will be hiked by $2 to $13.99. The Basic U.S. plan, which only supports one simultaneous non-HD stream, will remain priced at $7.99. Customers will be notified of price hikes starting on Oct. 19 and are promised at least 30 days’ notice.

Not surprisingly, investors who have long wanted to see Netflix further flex its pricing power are applauding the move: Shares rose 5.4% to $194.39 on Thursday, a new all-time high, and are now up 57% on the year. Netflix’s $84 billion market cap is higher than that of every media giant except Walt Disney Co. (DIS) .

For now, Netflix hasn’t signaled whether it will also be hiking prices in overseas markets, which held slightly over half of the 104 million streaming subs the company had at the end of Q2 and have been responsible for the lion’s share of its recent subscriber growth. But considering how Netflix’s last price hike gradually were applied to overseas users, odds are good that the same will hold for this one.

As it is, Netflix hiked its Canadian prices in August, and began testing an Australian price hike a few months before that. Chances are that the reactions it saw to price hikes in smaller English-speaking markets (or lack thereof) made Netflix more confident about pulling the trigger on a U.S. price hike.

One big difference between this Netflix price hike and the last one: It will affect all U.S. subs almost immediately. Though Netflix first announced its last price hike in May 2014, many older subs didn’t see their bills rise until well into 2016. With its 2011 Qwikster fiasco now a distant memory, Netflix now feels comfortable providing much less advance notice.