Shares in other companies in the space, including Disney and Roku, also fell. The company’s share price fell by more than 30 percent at the open, analysts downgraded the company in droves, and the company’s own forecasts became even more bearish. Netflix’s shocking quarter, in which it lost subscribers for the fist time in more than a decade, has sent a ripple effect throughout the entertainment business.
The streaming video business is now undergoing a stress test of its own, but it isn’t a hypothetical. The purpose of the stress tests, particularly the “severely adverse” hypothetical, is to “assess the strength and resilience of financial institutions,” according to the Treasury Department.
Email Business of Media Netflix’s tough quarter starts streaming’s biggest stress testĪfter the 2008 financial crisis, Congress passed a law that included mandatory “stress tests” for Wall Street banks, reports the Hollywood Reporter’s Alex Weprin.įinancial institutions that are subject to the bill are required to run a variety of tests, including “baseline and severely adverse scenarios” that incorporate factors like macroeconomic activity, income, prices and interest rates, among other factors.
