Elon Musk Stops Watching Netflix: Netflix Stock Drops Nearly 5% Amid Elon Musk's Boycott Call

Netflix's stock has dropped nearly 5% over the last five trading days. This decline follows Tesla CEO Elon Musk's call for a boycott of the streaming service. On Friday, Netflix shares experienced their largest weekly drop since April, despite a broader market rally. While major indices climbed approximately 2% to new highs, Netflix lagged behind other tech giants like Amazon and Meta.

Musk has been vocal on X, urging users to cancel their Netflix subscriptions. His criticism stems from alleged transgender content in children's shows on the platform. This week, Musk specifically targeted an animated series and its creator, posting, "Cancel Netflix for the health of your kids." The post was in response to claims that Netflix promotes a "transgender woke agenda."

Controversy Surrounding 'Dead End: Paranormal Park'

The backlash focuses on the animated series Dead End: Paranormal Park. The show featured a transgender character and was cancelled in 2023 after two seasons. Musk also reacted to posts criticising alleged comments by the show's creator, Hamish Steele. A conservative X account claimed Steele "mocked" activist Charlie Kirk's murder.

Libs of TikTok shared screenshots from a Netflix report highlighting an increase in non-white directors and lead actors across its programmes. This added fuel to the ongoing controversy surrounding the streaming giant.

Financial Outlook Amidst Boycott

Netflix is set to release its third-quarter earnings later this month. The immediate impact of Musk's boycott may be difficult to measure since Netflix no longer reports subscriber numbers quarterly. In its latest report, Netflix exceeded Wall Street expectations and raised its full-year revenue forecast.

The company anticipates third-quarter revenue of $11.53 billion and earnings per share of $6.87, surpassing analysts' initial estimates. For the entire year, Netflix projects revenue between $44.8 billion and $45.2 billion, driven by ad-supported tier growth, favourable foreign exchange rates, and consistent user engagement.

Ad Sales and Future Content

Executives have stated that ad sales are expected to nearly double to $3 billion next year. New seasons of popular shows like Wednesday, Stranger Things, and Squid Game are anticipated to sustain momentum alongside expanded live sports offerings.

Netflix has faced similar controversies before. In 2020, the film Cuties caused bipartisan outrage over alleged child sexualisation, leading to increased cancellations. However, Netflix managed to retain its subscriber base and continued growing in subsequent years.

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