Netflix as a price factor? What initially sounds like clickbait is the result of a new event study in the Journal of Business Economics. Scandal documentaries on Netflix depress the share prices of the companies portrayed – noticeably and persistently, even though the underlying affairs were usually public knowledge long ago.
The authors (Gregor Dorfleitner, Pedro Piccoli) examine 12 Netflix titles and the reaction of the associated stocks. The central result: after publication, prices fall significantly – and the decline is not “bought back” in the weeks afterwards. On average, the cumulative abnormal return after around three months is -15.3 percent. Noticeable: The negative deviations only become statistically significant after about four weeks – so the information is priced in gradually, not suddenly.
Heavy price losses of 72 percent
Concrete examples from the sample: In “Dirty Money” (Netflix series), Volkswagen (diesel/NOx) and HSBC (money laundering allegations) are taken up, among others. In “Downfall: The Case Against Boeing” the focus is on Boeing (737 MAX disasters). “White Hot: The Rise & Fall of Abercrombie & Fitch” examines the controversies surrounding Abercrombie & Fitch – a case that is particularly strong in the data. In response, the stock lost over 72 percent of its value. “The Social Dilemma” (including Facebook and Twitter) is also part of the investigation.
Attention becomes a crucial factor
Why does a documentary move prices when the facts are known? The study clearly speaks for attention as a driver: After the release, both trading volumes (on average +17%) and Google search queries for the affected companies (on average +15%) increase. In addition, a significantly negative relationship between (high) volume and returns only emerges after publication – a pattern that did not exist before. Competitor stocks do not perform similarly over the same period, which speaks against pure industry effects.
The four lessons for investors
What does this mean for private investors? First: Reputation risks are not “checked off” just because a scandal happened years ago, legally or in the media – reach and storytelling can trigger a second round of evaluation. Secondly, anyone who holds individual stocks should also keep an eye on narrative risks (streaming, social, viral attention) in addition to quarterly figures. Third: This can be an event risk for traders – a reminder for long-term investors that “known” does not mean “priced in”. Fourth: A Netflix program preview as part of the next event calendar is not the worst idea.
Editorial team finanzen.net
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