According to Financial Times News, a new study from researchers Arbab Cheema, Arman Eshraghi, Raghavendra Rau, and Qingwei Wang links late-night Netflix binges to stock market declines. The paper examines the decade-long trend of streaming services doing midnight “dump releases” of entire seasons. It finds that market returns are significantly lower on the trading day following these popular late-night show releases. Specifically, the S&P 500 index drops by an average of about 0.25% the next day. With an estimated 10 major shows released per year, this adds up to a cumulative annual drag on returns of around 2.3%. The study argues this is caused by sleep-deprived traders, particularly institutional investors, making poorer decisions.
The Sleepy Trader Thesis
Here’s the thing: the idea that tired traders move markets isn’t new. Finance nerds have poked at the “daylight saving time anomaly” for years, looking at the market’s sluggish performance after we lose an hour of sleep. But that research is messy and contested. This Netflix study tries a different angle. Instead of a government-mandated time shift, it looks at a self-inflicted, cultural one. The logic is simple: binge-watching a whole season of Succession until sunrise will wreck you more than losing one hour over a weekend. And if enough market pros are doing it, their collective foggy brains might just show up in the prices.
Large Caps, Not Meme Stocks
Now, this is where it gets interesting. You’d think this kind of fatigue-driven trading would hit volatile, retail-heavy small caps hardest—the stuff people trade on emotion. But this study found the opposite. The “day-after” effect was strongest for large-cap stocks with high institutional ownership. Why? The researchers have a few theories. Pros already run on less sleep, so they have no buffer. Also, when you’re knackered, you might just sell the easy, liquid stuff. Large caps have tight bid-ask spreads and low dealing costs. It’s the path of least resistance for a tired brain. Basically, even the smart money gets lazy.
Is This Actionable or Just Academic?
So, can you trade this? A quant fund might look at that 0.25% average dip and try to build a model. But good luck. The study’s list of “popular late-night shows” is… broad. It includes heavy dramas like Dopesick alongside The Great British Baking Show. Defining “appointment TV” in the streaming era is super fuzzy. And let’s be real: the most obvious outcome of a tired market is low volume, which is a nightmare to trade in. Maybe the real insight is more general: when a critical mass of market participants are “tired and emotional,” prices can drift. Think ahead of major sporting events or holiday seasons. But pinning it to a specific Netflix release? That seems like a stretch.
A Campaign Against the Binge?
What’s the endgame here? The paper, which you can find on SSRN, feels like the start of a very niche crusade. Could this evolve into a call to ban midnight content dumps for the good of the economy? It would need way more evidence. But it’s a funny thought. We often worry about algorithms and high-frequency traders moving markets. This study suggests the bigger threat might be a bunch of hedge fund managers glued to Cobra Kai. It’s a novel, if slightly silly, reminder that markets are still human—and humans need sleep. Just maybe not as much as the next season of Stranger Things.
