Can New Streaming Taxes Harm Netflix Stock?
Netflix, Inc. (NASDAQ:NFLX) and Netflix stock could be in trouble as video streaming taxes gain popularity across several U.S. cities, most recently in Pasadena, California.
I know it’s hard to interrupt your The Queen or Gilmore Girls binge, but you might want to pay attention, as your Netflix bill might be getting a nine-percent price hike someday soon. (Source: ““Netflix tax” may be coming soon to your bill,” CBS News, November 24, 2016.)
Residents, as you can imagine, are not happy.
Pasadena is hardly the first, however. Chicago is currently in court fighting a lawsuit brought against their nine-percent streaming tax. The whole state of Pennsylvania is charging a six-percent sales tax on everything, from apps to downloads, to help reduce its $1.3-billion deficit.
The question now lies in how far these are taxes going to travel, and then how much of an impact will they have on consumers. If the taxes continue to spread, for instance, would more streamers resort to illegal downloads and sites versus ponying up the extra cash for a Netflix account? And, in that scenario, could the flight be enough to harm Netflix stock?
We’re still a long ways away from that reality, surely, but as cable-cutting continues to grow and people prefer video streaming to the more traditional media consumption methods, increased taxes might be seen as a way to increase government revenue. In which case, eyes might want to gravitate toward Netflix stock.