One of the concerns coming out of the possible merger of Netflix with Warner Bros. Discovery was that subscribers would pay higher prices for the programs and movies they wanted to watch. Now that the deal has fallen apart, that price increase may happen anyway.

Citi Research media analyst Jason Bazinet says Netflix $(NFLX)$ is now better positioned for a price hike by the fourth quarter of this year, given that it is no longer facing regulatory scrutiny from the Warner Bros. $(WBD)$ deal.

"Many investors believed Netflix was unlikely to raise prices during the regulatory review associated with M&A," Bazinet wrote in a note to clients. "Today, however, we see no reason Netflix can't raise prices."

A representative for Netflix had no immediate comment.

Bazinet said given Netflix's past cadence of price increases - it last raised its prices in January 2025 - it would be on schedule to do it again by October. He calculated that a 5% increase in average revenue per user would translate into a stock bump of up to 6%.

Netflix currently charges from $7.99 a month for its lowest-priced, ad-supported plan, to $24.99 a month for its most expansive, ad-free plan.

Bazinet said that at present, Netflix is the third-most-expensive streaming service for its non-ad-supported plan, but given the depth of its content and ability to retain its audience, it could raise prices to become the most expensive service without a big impact on its subscriber numbers.

Netflix has around 325 million subscribers worldwide..

The possible gain in subscription revenue, plus expectations that Netflix will increase its operating-margin guidance now that it can remove potential drag from the merger from its calculations, and greater potential for stock buybacks, has led Citi to raise its rating for Netflix to a buy with a price target of $115 a share.

Netflix shares were trading up around 0.7% late Wednesday at $95.03.

Citi had suspended its rating for Netflix after it had announced in early December that it had reached a deal to acquire Warner Bros.' studio and streaming divisions for $82.7 billion. Netflix later dropped out of the deal after Paramount Skydance $(PSKY)$ submitted a higher offer of $110 billion for all of Warner Bros. Discovery.

Bazinet wrote that while the failure of the deal freed up Netflix in several ways to increase its revenue and create larger cash balances, the one area of possible concern revolved around the growth of Netflix's ad business.

Current consensus among analysts is that Netflix will bring in $11 billion a year in advertising revenue by 2030, which is down from the projection of $12 billion that analysts had predicted in 2025. But Bazinet said he believes that Netflix will come up short and will likely land closer to $9 billion by 2030.