Quick Hit:

Netflix witnessed a significant rise in U.S. cancelations after its chairman, Reed Hastings, donated $7 million to a pro-Kamala Harris super PAC. The backlash highlights the risks businesses face when making political endorsements.

Key Details:

• Netflix cancelations nearly tripled in July after Hastings' donation, per Bloomberg.

• The hashtag #CancelNetflix trended on X, with users posting proof of canceling subscriptions.

• Hastings' donation should serve as a warning to businesses about the consequences of political statements.

Diving Deeper:

Netflix faced a massive backlash in July 2024, with cancelations surging after chairman Reed Hastings endorsed Kamala Harris and donated $7 million to a pro-Harris super PAC. As Bobby Burack of OutKick reported, Netflix's U.S. cancelation rate nearly tripled that month. “On July 26, three days after the donation became public, Netflix suffered its worst day of cancelations this year," Burack stated, pointing to a growing trend among conservative consumers to push back against businesses they perceive as hostile to their values.

The fallout is reminiscent of other brands like Bud Light and Disney, who experienced similar consumer-driven reactions. Bud Light, for instance, saw its market value plummet by $27 billion after partnering with trans influencer Dylan Mulvaney, losing its spot as the top-selling beer in America. Burack pointed out that Netflix could face similar challenges, with 2.8% of subscribers leaving in July alone. Though Netflix previously saw a spike in cancelations due to the phasing out of its basic tier, this particular surge is being directly tied to Hastings' political donation.

Burack cautions other CEOs, writing, “Reed Hastings and other CEOs are free to endorse and donate to any candidate they choose. And their consumers are free to respond by taking their business elsewhere.” This marks a new era in consumer activism, with conservative Americans increasingly unwilling to fund companies that appear aligned with left-leaning political causes.

As Burack noted, this is not just an isolated incident: "In 2023, seven of Disney’s eight major theatrical releases significantly underperformed," which many attribute to Disney's political messaging. Likewise, Target, Starbucks, and other brands have faced similar boycotts.

The core lesson, as Burack highlights, is that businesses need to carefully weigh the risks of making political statements.