What happened
Shares of the tech-giant Alphabet (GOOG -1.96%) (GOOGL -1.97%) were rising today after an AdAge report came out indicating that the company is talking with Netflix (NFLX 1.74%) about potentially working on an advertising deal with the video streaming service. The tech stock was up by 4.5% as of 1:55 p.m. ET.
So what
The AdAge report said Alphabet's Google is currently a "front-runner" among other competitors to forge an advertising partnership with Netflix, as the streaming service looks to boost its ad revenue.
Image source: Getty Images.
You may recall that Netflix's management said recently that it wants to launch an ad-supported streaming tier that would help the company attract additional users. The company hasn't launched the idea just yet, but teaming up with Alphabet -- which has nearly unmatched experience in the ad business -- could help Netflix move closer to achieving its goal.
Alphabet investors were likely driving the stock higher today as they anticipate a deal with Netflix could be a significant addition to the company's already-successful ad business. Shareholders may be especially interested in a partnership between the two companies right now because some are concerned that the economy could experience a slowdown as the Federal Reserve raises interest rates in order to tamp down inflation.
If an economic slowdown does happen, it could curb some spending on online advertising. A new ad partnership with Netflix would be a welcomed deal for both Alphabet and its investors right now.
Now what
No official deal has been announced between Netflix and Alphabet yet, so investors will want to keep a close eye on any new developments. In the meantime, Alphabet investors should prepare for more share-price swings as investors continue to digest news about the economy and inflation.
