Netflix, Disney, WBD Shares Dive With Broader Market As Slow Retail Sales, High Interest Rates Fuel Recession Fears

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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.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.

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.” 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.

So, for the foreseeable future, consumers and companies will be facing both high prices and high interest rates, the latter possibly leading to recession. That keeps advertisers, who like economic clarity, on the sidelines.

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Netflix is in a tedious predicament.

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