Why Netflix's Subscriber Drop Is Dragging Streaming Stocks Down
Explore how Netflix's first subscriber loss in a decade is impacting major streaming services like Disney and Roku, signaling a shift in viewer behavior and market dynamics.
Streaming stocks are facing significant declines as Netflix (NFLX) reports its first subscriber loss in ten years, sending ripples across the industry. Alongside Netflix, shares of Disney (DIS) and Roku (ROKU) have also fallen sharply.
Roku's shares dropped nearly 7% in early trading, while Walt Disney's stock fell by almost 5%. Netflix experienced a dramatic 37% plunge amid heavy trading after forecasting a loss of two million subscribers for the current quarter. The company also revealed a decline of 200,000 subscribers in the first quarter, attributing the downturn to intensified competition and widespread password sharing. Year-to-date, Netflix shares have declined 63% and are down nearly 70% from their peak in November 2021.
Other streaming platforms, including Warner Bros. Discovery (WBD), Paramount Global (PARA), and Spotify (SPOT), also saw their stock prices tumble.
Investors are now debating whether Netflix's subscriber woes are isolated or indicative of broader 'streaming fatigue' as pandemic restrictions ease. Disney, with its trio of streaming services—Disney+, Hulu, and ESPN+—appears particularly exposed. Recently, Disney announced plans to introduce a more affordable, ad-supported Disney+ tier in the U.S. Currently, Netflix and Apple TV+ are the only major services without a lower-cost, ad-supported option. Netflix is now considering launching an ad-supported plan to attract more subscribers. Co-CEO Reed Hastings noted in an analyst meeting that such a move could be highly beneficial.
Caleb Silver, editor-in-chief of Investopedia, commented, "Netflix's sharp stock decline has erased all gains made since 2018. Given that Netflix is widely held across tech index funds and ETFs—about 265 funds include it—many investors are indirectly affected, even if they don't own the stock directly."
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