Key Points
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Recessions can only be determined in hindsight, typically involving weaker consumer spending.
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Netflix may thrive in a mild recession, but could face declining revenue and subscribers in a severe downturn.
Netflix (NASDAQ: NFLX) has shown significant growth over the years, but current economic concerns indicate a possible recession. Consumer spending, which accounts for nearly 70% of the U.S. economy, is at an all-time low, raising fears of a downturn. The last U.S. recession occurred during the onset of the COVID-19 pandemic, which led to a quick spike in demand for Netflix as consumers turned to streaming for entertainment while at home.
In the event of a mild recession over the next six to twelve months, Netflix might retain its subscriber base as people choose to stay in and save money. Conversely, a severe recession could lead to increased unemployment and a significant decline in consumer spending, negatively impacting Netflix’s subscription model. In such scenarios, Netflix’s stock is expected to drop alongside the market, but the company has a robust financial cushion, boasting a 24% net profit margin as of 2025.
