Socks sink on rising inflation; Netflix plagued by Goldman downgrade – Deadline

Dismal monthly inflation data hit stocks Friday with tech, internet and media taking a beating and Goldman Sachs beating the rare “sale” rating on Netflix and a few others.

The bank downgraded the streamer’s rating from “neutral” on economic and competitive jitters and lowered its price target from $265 to $186 – the lowest on the street.

“We are concerned about the impact of a consumer recession and increased competition on demand trends, both in the form of gross additions and churn, margin expansion and content spend levels,” Goldman analyst Eric Sheridan said in a note. to customers.

Netflix shares closed 5.1% lower at $182.94. That’s well below its 52-week high of over $700. Year to date, it’s lost nearly 70% after it missed its subscriber numbers and outlook last quarter.

Analysts and economists are concerned about slower consumer spending as inflation tightens its grip and prices rise from gas to food to housing. The US Bureau of Labor Statistics reported this morning that annual inflation reached a new 40-year high at 8.6% in May. That’s how much prices have gone up year after year. The Federal Reserve has raised interest rates to try to cool the economy and dampen prices, but doing so has its own pitfalls, including the risk of a recession.

Netflix is ​​now a “show me the story,” Goldman said, citing rivals Disney and Amazon whose shares are also ravaged amid the downdraft today (up 3.7%% and 5.6%).

Apple fell 3.8%.

The Nasdaq lost 3.52% at the close. The DJIA fell 2.73% – from 880 points. The S&P 500 fell 2.91%.

Wall Streeters worry there are too many streaming services in an environment where consumers have to cut back to deal with skyrocketing fuel, food and rent prices. President Biden today attacked oil companies led by Exxon Mobil for profit.

Other losers are Spotify, down 8.7% and Snap, down 5.8%. Meta is down 4.6%.

Paramount fell 3.6%. Warner Bros Discovery fell 4.9%.

While Netflix stock is still above the low it plunged to in April after a dismal earnings report and a forecast of up to 2 million subscriber losses in the current quarter, it’s still at its lowest point since 2018. Overall bearish sentiment on the subject. technology has exacerbated execution problems for Netflix, with the sector’s stock hitting its worst in 20 years.

For streaming providers, inflation is the number one concern of many analysts. Netflix has recently become the most expensive general entertainment service on the market, and Co-CEO Reed Hastings has indicated that the company would soon move to add a cheaper, ad-supported tier to match Disney+, Hulu, Peacock, HBO Max. and other rivals.

Netflix executives have cited macroeconomic pressures, especially entanglements in the global supply chain, as a drag on the company’s financial results. But they say they still have leverage to raise prices, given their industry-leading 222 million subscribers and enviably low customer churn. In recent months, the company has recognized the need to improve the caliber of its original programming, which now accounts for more than half of the titles on the platform. It’s also engaged in gaming and interactive storytelling, with the goal of those extra offers luring in new subscribers and convincing existing subscribers not to cancel.

Dade Hayes contributed to this story