The emergence of Netflix’s (NFLX) streaming platform in 2007 revolutionized the entertainment industry. Over the years and amidst growing competition, Netflix has created value for shareholders. If there has to be a moat that’s worth calling out, it’s Netflix’s superior content.
Leveraging on that moat, Netflix recently announced that the company will be raising its subscription prices. This is because the company plans to increase its content budget to $20 billion.
It’s worth noting that Netflix last raised its subscription fee in January 2025. Further, the current hike is a $1 raise for the standard plan with ads to $8.99 per month, a $2 raise for the standard plan with no ads to $19.99 per month, and a $2 raise for the premium plan to $26.99 per month. With that in mind, these price hikes are unlikely to have an impact on the number of subscribers. At the same time, continued content-pull is likely to remain the growth factor.
Headquartered in Los Gatos, California, Netflix is a leading entertainment services company offering TV series, films, games and live programming. The company’s services offering is across a variety of genres and languages, which has translated into a significant market globally. As of Q4 2025, Netflix had 325 million paid memberships.
In December 2025, Netflix announced the acquisition of Warner Bros. from Warner Bros. Discovery (WBD) in a cash and stock transaction valued at $27.75 per WBD share. This implied a total enterprise value of approximately $82.7 billion.
However, Paramount Skydance (PSKY) put forward a “Superior Proposal” to acquire Warner Bros. in February 2026. Netflix declined to raise its offer. Citi recently reinitiated coverage on Netflix with a “Buy” rating and believes that walking away from the deal is a positive for the company.
Despite multiple positives, NFLX stock has corrected by 23% in the last six months. With the recent announcement of subscription rate hikes, shares will likely trend higher from oversold levels.
Importantly, Netflix ended fiscal 2025 with a cash buffer of $9 billion, while operating cash flow for the period was $10.1 billion. In fiscal 2023, Netflix reported an operating margin of 20.6%, which swelled to 29.5% in fiscal 2025. For the current year, Netflix is guiding for an operating margin of 31.5%, which is in-line with the recent increase in subscription rates. It’s therefore likely that cash flows will increase in fiscal 2026 and provide the company with ample flexibility to invest in new content creation.
