Netflix, Inc. (NASDAQ:NFLX) customer base will create an invisible price increase of its own


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Netflix, Inc. (NASDAQ:NFLX) customer base will create an invisible price increase of its own

Netflix, Inc. (NASDAQ:NFLX) customer base will create an invisible price increase of its own

Netflix (NASDAQ:NFLX) just raised prices. Customers hated it. Investors loved it. It caused a stir, and then it faded away — and, if patterns hold, it should be at least a year or two before we see Netflix hike prices again. But that doesn’t mean that customers won’t find themselves paying more for Netflix over the coming months and years. Trends suggest Netflix’s customer base will create an invisible price increase of its own, one that will matter to Netflix in 2019, 2020, and beyond.

Netflix’s service tiers

To understand what might happen, we need to understand Netflix’s price tiers.

Basic TierStandard TierPremium Tier
Price$8.99$12.99$15.99
Select featuresStandard definition, one screen at a timeHigh definition, two screens at a time 4K Ultra HD, four screens at a time

DATA SOURCE: NETFLIX.

Netflix’s most popular plan is its standard plan, which offers multiple streams — useful for families — and 1080p high-definition streaming. The basic plan is quite limited in an era when standard definition feels quaint, especially since it limits things to just one stream (not likely to be popular among the more than 70% of people who share subscription passwords for services like Netflix).

Then there is the premium plan. It offers additional streams and 4K Ultra HD streaming quality. That 4K Ultra HD is increasingly becoming the norm in the TV and streaming marketplace.

The rise of 4K Ultra HD

4K Ultra HD is the latest and greatest mainstream high-def format. Like its predecessors 720p and 1080p, 4K is named after its pixel count: 4,000, though pedants will note that this figure is rounded up from the more accurate 3,840 and refers to pixels along the long side; the numbers 720 and 1,080 were taken from the short side. Whatever the details, though, 4K is the best HD the typical consumer can buy. Its eventual replacement, 8K, was a novelty at tech trade show CES this year and is not expected to make much of a consumer splash anytime in the next couple of years.

The CES debut of 4K came way back in 2012. Consumer models that followed were pricey, and 4K — like all fancy new TV technology — took a while to go from novelty to industry standard.

But we’re there. TVs with 4K are way down in price since 2012. Once in the thousands of dollars, they now sell in the hundreds. This technology is not just for early adopters and conspicuous consumers anymore.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 319.12.

The projected upper bound is: 370.66.

The projected lower bound is: 311.18.

The projected closing price is: 340.92.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with NETFLIX INC), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 75.3828. This is not an overbought or oversold reading. The last signal was a buy 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 60.73. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 9 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 26. This is not a topping or bottoming area. The last signal was a sell 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.

Rex Takasugi – TD Profile

NETFLIX INC closed up 0.350 at 339.850. Volume was 27% below average (neutral) and Bollinger Bands were 27% narrower than normal.

Open High Low Close Volume___
337.180 346.840 336.500 339.850 9,827,760

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 333.55 293.34 335.63
Volatility: 49 66 56
Volume: 12,424,591 13,249,191 11,680,277

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NETFLIX INC is currently 1.3% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of NFLX.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on NFLX.O and have had this outlook for the last 19 periods.

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