Netflix Rises on Price Increase, but Next Week Is the Market's Real Test

The stock market had another tough week, as 2022 hasn't gotten off to the bullish start that many investors had hoped to see. Some trends from earlier in the year reversed themselves on Friday, as it was the Nasdaq Composite (^IXIC -2.05%) that posted the biggest gains while the Dow Jones Industrial Average (^DJI 0.56%) lost ground after some downbeat earnings results from big banks. The S&P 500 (^GSPC -0.88%) finished the day close to unchanged.

Data source: Yahoo! Finance.

Late in the day, shares of Netflix (NFLX -9.09%) climbed abruptly, with a big bump around 3 p.m. ET that left the video streaming company's  stock finishing higher by more than 1%. Yet investors are still anxious about what next week will bring, as many key companies will report their latest results when earnings season kicks into high gear.

A price increase for Netflix

Netflix shares were down most of the day before the late-afternoon rise. Investors are always pleased to see the premier video service boost its prices, and the go-to strategic move had the desired effect today as well.

Image source: Getty Images.

Netflix's price increases will be nearly across the board. The standard Netflix plan will rise in price in the U.S. from $13.99 to $15.49 per month, a boost of 11%. The premium plan, which was previously billed at  $17.99, will rise to $19.99. The most basic plan will see a $1 increase to $9.99 per month. The various tiers allow viewers to watch shows on one, two, or four screens simultaneously, with HD video available on the top two tiers and Ultra HD 4K available only to premium subscribers.

The increases will take effect immediately for new subscribers. Existing subscribers can expect to receive an email notification in the near future, after which they'll have 30 days before they'll see price changes.

The last Netflix increase went into effect more than a year ago, but this increase affects nearly all subscribers, whereas the previous one only changed prices for standard and premium subscribers.

Netflix explained that the move will bring in more cash to finance acquisition of more entertainment programming for subscribers. It'll be interesting to see whether in an environment in which there's far more competition for eyeballs in streaming video than there used to be, Netflix still has the pricing power to be able to boost its prices without seeing a big jump in subscriber churn. Investors can expect to learn more when Netflix reports its quarterly results next Thursday.

Some giants on deck with earnings

Beyond Netflix, investors are already looking forward to next week's holiday-shortened slate of earnings reports. Tuesday will bring more reports from financial companies, with banking giants Goldman Sachs (GS 0.22%) and Bank of America (BAC 3.35%) weighing in on Tuesday. Market participants will look at those results closely to see whether the banks' trading operations show the same pressures that JPMorgan Chase's (JPM 2.51%) showed this morning.

Also reporting will be UnitedHealth Group (UNH 1.61%). The health insurer's Wednesday report should provide some indications about how the healthcare industry is doing as the pandemic continues, but investors expect a better than 70% rise in earnings per share on double-digit percentage sales gains. More airlines will also report, following up on Delta Air Lines (DAL -0.58%) and its reasonably solid performance earlier this week.

A lot is riding on earnings season this quarter. With many investors nervous about the current level of the stock market, strong results would be reassuring. However, poor numbers could exacerbate the early decline in major market benchmarks and raise questions about a longer-term correction.