The Nasdaq Composite rose 1.7 percent on Tuesday as shares of Netflix soared 6.5 percent after it announced it would raise its prices for streaming services. The rally in tech fueled the Direxion Daily Technology Bull 3X ETF (NYSEArca: TECL), which rose 4 percent.
Other big names like Amazon and Google contributed to the strength in the tech sector. Amazon gained 3.5 percent while Google rose 3.3 percent.
Meanwhile, the inverse ETF Direxion Daily Technology Bear 3X ETF (NYSEArca: TECS) lost 4.46 percent. The tech sector tumult seen in the last few months of volatility is still evident in that TECL continues to trade below its 200-day moving average.
Netflix Service Increases Boost Stock, Tech
Netflix’s Basic plan will now cost $9–up from $8. Its Standard plan will cost $13, which is up from $11, and its 4K Premium plan is now $16 as opposed to the previous $14. Overall, prices went 13 to 18 percent higher–the online streaming service company’s biggest price jumps in over 10 years.
“Investors will likely view this above-Street estimate increase quite positively, bolstering confidence in subscriber trends, pace of revenue growth and ability to achieve guidance for margin gains,” said Doug Mitchelson, an analyst at Credit Suisse.
Exchange-traded funds with exposure to Netflix were higher. AdvisorShares New Tech and Media ETF (NYSEArca: FNG) was up 1 percent, Invesco NASDAQ Internet ETF (NasdaqGM: PNQI) rose 2.55 percent and Invesco Dynamic Media ETF (NYSEArca: PBS) was up 1.18 percent.
The additional revenue stemming from the price increases will help Netflix’s investment in creating original shows and films. In addition, the additional income should help finance the debt it took on in order to compete with streaming services from the likes of Amazon, Disney and Apple.
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