Bill Nygren likes Netflix, says price hike won’t scare subscribers

Nygren joined Harris Associates, the investment advisor for Oakmark Funds, in 1983. He’s been portfolio manager of the Oakmark Fund since 2000. The OAKMX, which has $21.5 billion in assets as of September 2018, is beating the S&P 500 so far in 2019 after coming up short in 2018. The fund has largely beat the index going back to 2010.

Netflix’s price increase, which sent shares soaring on Tuesday, means it’s basic plan will cost $9, up from $8. Its most popular HD standard plan will cost $13, up from $11, and its 4K premium plan will cost $16, up from $14.

Nygren said the new prices show what a value Netflix is to the customer. “We don’t think they’ll lose subscribers or even slow their subscriber growth despite having somewhat of a meaningful price increase.”

Wall Street analysts largely agree. In notes to clients, they said it showed management’s confidence in the upcoming content releases.

Netflix shares have been on a roll so far this year, gaining more than 30 percent, including Tuesday’s sharp increase.

The stock, overall, had a strong 2018 as well, rising nearly 40 percent to close out the year at $267. But in the first six months it had more than doubled to an all-time high of $423 in late June, only to lose nearly 45 percent by the close on Christmas Eve.

Like many of the big tech stocks, Netflix remained in correction territory as defined by a decline in an asset price of 10 percent or more from recent highs.


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