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Netflix Reports Q1 Earnings and plan to increase membership price

Video streaming service Netflix (NASDAQ: NFLX) has just announced and released its first quarter financial results after market close.  Netflix reported higher profit that beat Wall Street expectations. For the first quarter of 2014, the media giant reported earnings of $0.86 per share on revenues of $1.27 billion.

Netflix Reports Q1 Earnings and plan to increase membership price

Netflix also announced that in the first quarter it gained 2.25 million domestic subscribers and 1.75 million internationally. Overall, Netflix reported a first-quarter profit of $53 million, or 86 cents a share, up from $3 million, or five cents a share, a year ago.

Furthermore, the compant declared they intend to raise the monthly subscription price for new customers, sending its stock up 6.5 percent in after-hours trading.

Netflix, in a quarterly letter to shareholders, said it plans to impose "a one or two dollar increase, depending on the country, later this quarter for new members only."

We have to consider that Netflix suffered from a consumer backlash and stock plunge after it announced an unpopular price increase in July 2011.

Anyway, there are several reasons to be optimistic about Netflix's prospects:

  1.  For the first time, Netflix has surpassed YouTube to become the leading online video site.
  2.  Most Netflix customers are happy with the service, according to recent surveys
  3.  Netflix subscribers are increasingly less likely to leave the service.

Wall Street analysts will also be eager to hear more details from Netflix executives about the company's controversial agreement to pay Comcast (CMCSA) for a direct connection to the nation's largest broadband provider.

Although Netflix CEO Reed Hastings has expressed his displeasure about the deal, there is clear evidence that the interconnection pact is substantially boosting Netflix performance for Comcast subscribers, which should improve customer satisfaction even further.

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