RBC's Mark Mahaney: Netflix's ARPU Will Increase Overtime 'With Ways Other Than Just A Naked Price Increase'

RBC Capital analyst, Mark Mahaney, was on CNBC Thursday to discuss if Netflix, Inc. NFLX not raising prices in the traditional way is a cause of concern and to share his outlook for the stock. Here is what he said.

'They Do Have Pricing Power'

On whether he is comfortable with Netflix not raising prices going forward in the traditional way, Mahaney said, "We do have a price increase that is going to go into effect. Remember, it was grandfathered so we will have a lot of subs in the U.S. that are going to have face that dollar price increase and we don't know what the response is going to be. Our guess is that that price increase is going to go through successfully and smoothly."

He continued, "But that is a risk and then long-term if you are a bull on the stock and we are on Netflix, we think, they do have pricing power. They are able to offer tiering services and so they are ARPU will rise over time. We think that'll happen with ways other than just a naked price increase. We think, they have that power. We like the model, we think, it continues to grow."

Just Long On Stock  

Mahaney was asked his outlook for the stock going forward. He replied, "We have been strong and long this stock earlier this year. We are just long on the stock now, we see modest upside in the shares. But I want to make sure we don't miss upside by not owning the stock."

"I mean, they are going to add more subs in the U.S. this year than last year that tells you that Netflix in the U.S. -- it's most mature market -- is still first-half innings or is still inning 3, 4 or 5, it's not [late] in innings. And then international markets, it's still very early innings and in a lot of countries it hasn't even entered the ballpark," Mahaney said.