On Thursday Netflix Inc. increased the price for its standard subscription service to $9.99 from $8.99 for new customers. The streaming giant saw shares climb as much as 12% off the intraday low following news of the price hike. On Friday Wedbush analyst Michael Pachter said in a note that the price increase and competition reflect chinks in the company's armor. Pachter is bearish on Netflix, with a $40 price target and an underperform rating on the stock. "We believe that the increase reflects increasing content cost rather than pricing power," Pachter wrote. "The $1 increase is unlikely to trigger significant customer attrition, but it is insufficient to take Netflix to the high level of future profitability that its valuation implies." Shares of Netflix have more than doubled in the year to date, up 135%, and outperformed the S&P, which is down 2%. The Los Gatos, Calif.-company will report third-quarter earnings after the market closes on Wednesday, Oct. 14.
Copyright © 2015 MarketWatch, Inc.