Netflix Stock Is Falling Sharply: What's Going On?

Netflix Inc NFLX shares are trading lower Thursday following reports suggesting the company's ad-tier rollout isn't gaining much traction.

What Happened: Netflix launched its new ad-tier in early November to make its streaming services more accessible for a larger number of households. The new ad option is off to a slow start and Netflix is falling short on the guarantees it made to advertisers, according to a Digiday report, citing five agency execs.

The report indicates that Netflix is only seeing about 80% of its expected audience in certain cases, although the numbers vary by advertiser.

“They can’t deliver. They don’t have enough inventory to deliver. So they’re literally giving the money back,” one of the agency executives reportedly said.

Netflix brought advertisers on board by offering a "pay on delivery" deal in which advertisers would only pay for the users they actually got their ads in front of. Netflix is reportedly returning ad dollars to advertisers as it falls short on its projections. 

See Also: Netflix Hit 'Wednesday' Passes Key Milestone: Here's Why Investors Should Be Excited

NFLX Price Action: Netflix has a 52-week high of $620.61 and a 52-week low of $162.71. The stock has trended higher over the last few months, partially driven by optimism surrounding the streaming platform's new ad option. 

Netflix shares were down 6.86% at $295.89 at time of publication, according to Benzinga Pro.

Photo: yousafbhutta from Pixabay.