Netflix, Disney, WBD Shares Dive With Broader Market As Slow Retail Sales, High Interest Rates Fuel Recession Fears
15.12.2022 - 22:51
/ deadline.com
Media and entertainment stocks led by Netflix were among big losers Thursday as economic data and the latest Fed move has investors panicking about an imminent recession. Netflix in particular — off nearly 10% — was knocked by a report that its ad-supported tier is having a tough debut.
The DJIA is currently down 910 points, or 2.68%. The Nasdaq is off by 3.4% and the S&P 500 by 2.8%.
Digiday reported Netflix is falling short of viewership guarantees it made to advertisers and allowing them to take their money back for ads yet to run. Netflix doesn’t use traditional make-goods, which shift advertising cash into future promos, it says, but in some cases only requires marketers to pay for viewers they actually reach.
In a comment to Deadline, a Netflix spokesperson said: “While it’s still very early days for our ad supported tier, we’re pleased with the successful launch and the member engagement on the Basic with Ads plan, as well as the eagerness of advertisers to partner at the outset.”
Analysts tend to agree. “It’s not a surprise,” said Tim Nollen of Macquarie Research in a note today, “given how little Netflix has promoted the tier and, hence, converted subs.”
Netflix launched its ad-tier in early November. Disney+ with ads debuted last week even as executives across media began warning of a slow advertising climate. That’s largely the result of six consecutive interest rate hikes by the U.S. Federal Reserve since March, the latest a hefty 0.5% increase announced yesterday, combined with high inflation.
The Fed uses rate increases to slow the economy and tamp inflation, which reached its highest level in 40 years in 2022 as consumer spending, supply chain disruptions and other factors boosted demand and prices.
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