Shares of Netflix experienced a significant decline on Friday, marking the largest weekly drop since early April. Over the week, the stock plummeted nearly 5%, a stark contrast to the broader market, which saw gains of approximately 2% and reached new all-time highs. This downturn can be largely attributed to Tesla CEO Elon Musk’s intensified calls for a boycott of the streaming service.
Musk, who has a massive following of 227 million on X, has taken to social media to urge his followers to cancel their Netflix subscriptions. His criticisms center around the company’s alleged promotion of transgender themes in children’s programming. Recent posts from Musk included direct messages such as, “Cancel Netflix for the health of your kids,” further amplifying his stance against the platform.
Netflix has not responded to inquiries regarding Musk’s remarks. The timing of this campaign coincides with the company’s upcoming third-quarter earnings report scheduled for later this month. Since Netflix has stopped disclosing subscriber numbers each quarter, assessing the immediate impact of any boycott remains challenging.
Despite facing mounting pressure, Netflix recently surpassed Wall Street projections in its latest earnings report, raising its full-year revenue outlook. The company anticipates third-quarter revenue of approximately $11.53 billion, with earnings per share (EPS) expected to hit $6.87—both figures exceeding initial market estimates. For the entire year, Netflix predicts revenue between $44.8 billion and $45.2 billion, bolstered by strong growth in its ad-supported tier, favorable foreign exchange rates, and continued user engagement.
Executives at Netflix have indicated that ad sales are on track to potentially double to $3 billion by next year, complemented by new seasons of popular series like “Wednesday,” “Stranger Things,” and “Squid Game,” along with an expanding lineup of live sports content, which they believe will help maintain subscriber momentum.
This situation isn’t unprecedented for Netflix; the streaming giant previously faced backlash in 2020 over its release of the film “Cuties,” which sparked accusations of over-sexualizing young girls. That controversy led to a fivefold increase in cancellations, with data showing churn reaching multiyear highs during that period. The hashtag #CancelNetflix trended on social media for several days. Nonetheless, Netflix managed to recover from that incident without sustaining long-term damage to its subscriber base.
As the company prepares to navigate this latest challenge, the market and investors will closely monitor the fallout from Musk’s boycott campaign and its potential implications on Netflix’s financial health and subscriber engagement.
