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Netflix stock has experienced its worst weekly drop since April, with the streaming service's stock falling nearly 5% over the five days. The stock closed at $1,153.32, down 0.79% on the day, outperforming the S&P 500 but underperforming major technology stocks, such as Amazon and Meta, both of which reported gains for the week.
The decline is in contrast to the broader market, which rose around 2% to a new record. Investors began to focus more on streaming after Tesla CEO Elon Musk sparked controversy, encouraging his 227 million Twitter followers to cancel their subscriptions. Musk criticized Netflix as promoting inappropriate content in children's programming.
Throughout the week, Elon Musk posted and reposted several messages criticizing Netflix. On Tuesday, he wrote, "Cancel Netflix for the health of your kids," giving a boost to the online campaign. The streamer hasn't responded publicly to these comments.
The boycott push comes as Netflix is set to release its results for the third quarter later this month. Since the company doesn't currently offer quarterly subscriber updates, it remains difficult to gauge the direct impact of cancellations. In its latest earnings report, Netflix exceeded Wall Street expectations and raised its full-year outlook, but analysts noted that performance standards were already high.
Netflix expects third-quarter revenue of $11.53 billion and earnings per share of $6.87, both of which are higher than the initial consensus estimates. Full-year revenue is expected to be between $44.8 billion and $45.2 billion, backed by foreign exchange tailwinds, ad-supported tier growth, and solid engagement levels.
Executives predict ad sales will almost double to $3 billion in 2026. New seasons of "Stranger Things", "Wednesday", and "Squid Game", along with the expansion of live sports, should help maintain user interest.
The company has been the subject of similar debates in the past. In 2020, Netflix was criticized for the French movie Cuties, resulting in a brief wave of cancellations. Despite volatility, the company had long-term momentum. Oppenheimer analyst Jason Helfstein reiterated his Outperform rating and $1,425 price target this week, citing strong engagement data and continued content growth. Analysts believe that Netflix will get through the current episode without long-term damage.
