By Wong Kon How
Most businesses depend on mass market consumers to spend, especially from the middle income. Therefore, how well they are doing now and in the future is crucial for businesses and their growth.
Netflix crashed after the company reported its first quarterly loss of subscribers in more than a decade. Not too long ago Meta set a record for the largest one-day selloff in stock market history, more than $200 billion wiped off the value.
Netflix's stock dropped 30% when the market opened on Wednesday, instantly wiping more than $45 billion off the value of the company. Reason, it shed 200,000 subscribers in the first three months of the year, when it had been expecting to add 2.5 million.
But why are they losing clients?
Again, it is inflation. Persistent inflation is forcing households to re-evaluate their budgets. According to a report by media consultancy Kantar published by CNN, people in Great Britain canceled about 1.5 million streaming subscriptions in the first three months of 2022. "Food and energy are people's priorities right now, not watching 'Stranger Things,'" CMC Markets chief market analyst Michael Hewson told CNN.
Meta also depends on large number of small and medium size businesses to spend on advertising dollar. However, with the Fed assertion with more hikes the next two years, business owners are pessimistic on their earnings in the mid-term. They are too tightening their belts and spending lesser.
What business will still do well? Maybe those stocks with their target market towards the rich, wealthy and famous. Whether a pent up demand of EV and more technology gadgets in the future? Not forgetting to understand the spending habits of the mass market, it will be helpful to chart out the main direction in months or maybe years to come.