Wall Street’s lofty expectations for Netflix took a hit as the streaming giant’s third-quarter earnings fell short, sending its stock tumbling nearly 10%.
Despite reporting a robust 17.2% revenue increase to $11.5 billion, Netflix’s profit of $5.87 per share missed analyst forecasts, which had pegged earnings higher.
The company pointed to a 28% profit margin - below the anticipated 31.5% - blaming unexpected expenses of $619 million tied to an ongoing tax dispute with Brazilian authorities. Netflix insists these costs are a one-off and won’t drag future reports, but the damage was done, with investors reacting swiftly and harshly.
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Compounding the unease, Netflix remained vague on subscriber growth, offering only upbeat assurances of rising engagement without hard numbers. In a market craving clarity, this lack of transparency amplified concerns, turning even a hint of weakness into a full-blown sell-off trigger. While Netflix continues to dominate streaming, its latest report underscores the tightrope it walks between growth and investor expectations.
