Wall Street Gives Netflix A Pass

June 26, 2017

Reed Hastings, Netflix’s CEO, brought Hollywood to their knees when he casually mentioned he wanted to cancel more of Netflix’s original shows because he believed they should have a higher cancel rate overall. The dramatic comment was read by the entertainment industry that Netflix will soon be changing its current strategy that has unarguably lifted the way the industry views content. Wall Street stepped in and actually supported Hastings’ announcement and bid Netflix’s stock 2% higher over the following days after his statement, while consciously ignoring the high debt Netflix is in (estimated $3.4 billion) and the high amount they are about to spend to possibly alter their current strategy. Hastings has promised to spend about $6 billion in the upcoming year to change its tactic and maintain its strong lead over Amazon, Facebook, and YouTube in content viewing. Many analysts believe this is wise of Netflix to shift the balance because it is wisely aware of what the demographic is watching and, more importantly, when they stop watching. Different from broadcast television, canceled programs does not mean failures for Netflix. They play by different rules. Netflix loyalists expect freshness and newness and likes how Netflix takes risks. Over half of people with Netflix and traditional TV prefer Netflix and with a subscription rate of basically nothing ($8 per month) and zero commercials, it’s no wonder why. With the help of Wall Street, their new savvy economic design could work greatly in their favor.

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