Netflix tops earnings expectations; raises prices for new members

Netflix for trading, not investing: Pro

Netflix posted earnings that edged past Wall Street expectations Monday, while revenue was largely in line. In addition, the company said it will increase membership costs for new subscribers starting later in the quarter.

Shares rallied in extended-hours trading. (Click here to track its shares in after-hours trade.)

"Netflix is one of these momentum stocks, it is a great company it has a great CEO, I have been a subscriber for ten years," Bert Dohmen, president of Dohmen Capital Research told CNBC. "But it is a stock that is not for investing—it is a stock that's for trading. You don't want to be an investor unless you have a cast iron stomach. That stock can really test your fortitude. In 2011 it had a top around 304 it plunged to 54 one year later. That is one heck of a decline."

Momentum names such as Netflix have been on a rollercoaster ride in recent weeks, as investors fled from high-flying stocks.

The movie-streaming company posted earnings of 86 cents a share on sales of $1.27 billion. Analysts had expected the company to report earnings excluding items of 83 cents a share on $1.27 billion in revenue, according to a consensus estimate from Thomson Reuters.

In addition, the company said it expects to post current-quarter revenue of $1.14 billion, versus estimates for $1.31 billion.

The company also announced that it will increase membership prices for new subscribers by $1 to $2, depending on the country, later this quarter. Current Netflix members would stay at the current pricing for "a generous time period."

"These changes will enable us to acquire more content and deliver an even better streaming experience," the company said in its letter to shareholders.

"There is no way they can keep an $8 price for their subscribers and offer the services they offer," said Ross Gerber, CEO and co-founder of Gerber-Kawasaki. "The content costs and the delivery of the internet costs are going up with Netflix and this is going to affect their business moving forward."

Netflix's current pricing plan offers unlimited streaming movies and television episodes for $7.99 a month. Netflix also provides a one DVD out-at-a-time plan, also for $7.99 a month.

Additionally, the company announced a total number of 48.4 million subscribers in the first quarter. Netflix has remained the top streaming business despite increase competition from YouTube and Hulu.

Read MoreNetflix, Comcast agree to deal

Separately, Netflix opposed the pending Comcast and Time Warner Cable merger.

"As DSL fades in favor of cable Internet, Comcast could control high-speed broadband to the majority of American homes. Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix. The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers," according to the shareholder letter.

Comcast is the parent company of of CNBC.