🍿 Netflix’s profit pop

“Nobody Wants This”... Netflix’s password-mooching crackdown and price hikes are working. Yesterday the streaming leader reported that its profit popped 41% from last year, to $2.4B, a quarterly record. Netflix gained 5.1M subscribers last quarter, bringing its global total to nearly 283M. Investors have focused on that metric for ages, but next year the streamer will stop sharing subscriber #s to focus on revenue over membership growth. After the expectation-topping results, the stock spiked 5%.

Still watchin’… the countdown clock on the ad. For a long time, Netflix rejected the idea of having ads in its service. But since introducing its $7/month ad-supported tier a year ago, it seems it has no regrets. Netflix said that last quarter the ad plan accounted for half of sign-ups in countries where it’s available, and ad memberships surged 35% from the previous quarter (FYI: in May, the plan had 40M+ subs). As the cheaper tier prompts sign-ups, Netflix aims to launch it in more countries. 

• Change of strategy: Netflix is said to be earning more $$/user from its ad tier than from its pricier subs. It’s hiked prices for its premium plans, which could prompt folks to trade down to the ad tier.

Red is the new black… High-end retailers have lost billions in market value as Chinese consumers continue to skip out on Dior saddle bags. LVMH — which owns Dior, Louis Vuitton, Fendi, and 70+ other luxury brands — said its sales fell 3% last quarter. The luxe legend’s revenue fell 16% in Asia, dragged down by China, where LVMH said consumer confidence has hit lows not seen since the pandemic. Ferragamo’s also struggling to sell its fancy loafers in Beijing: the Italian fashion house this week reported that sales in the Asia Pacific region — which make up about a third of its total revenue — plunged 20%.

• BOGO: Companies including Gucci owner Kering, Burberry, Hugo Boss, and Cartier owner Richemont have warned investors about shrinking sales in China. Prada’s been an outlier, with revenue boosted by its more affordable Miu Miu brand.

Off the rack… The luxury slowdown is a symptom of weak spending in China, which has been struggling to revive its economy. The world’s second-largest economy is expected to report today that its third-quarter GDP grew at the slowest pace since 2022. The country’s in its longest period of deflation in decades as companies cut prices to drum up demand. While a broad decline in prices may sound good, it’s dangerous for economies. Companies might earn less money, leading them to scale back production and lay off workers, leaving consumers with even less money to spend… and so on.