Netflix shares drop 7% after outlook signals slower revenue growth

what happened

Netflix released its third-quarter results, which were broadly in line with analyst expectations, according to CNBC-TV18. Revenue came in at $12.87 billion, and earnings per share of $0.87 beat the $0.82 projection. Revenue growth slowed to 12% year on year, the third straight quarter of deceleration.

The main blow came from the outlook. For the fourth quarter the company expects revenue of $13.44 billion, implying 11% annual growth. Management blamed the advertising business, which is likely to deliver $300 million less than planned. After the close, the shares fell more than 7%, to below $64.

Added concerns come from management changes: the company cut about 6% of its workforce, over 1,000 people, and Chief Content Officer Bela Bajaria and film chief Dan Lin were fired. The stock has lost more than 25% so far this year.

why it matters

For markets, the issue is the trend as well as the single miss. If revenue growth keeps slowing in the fourth quarter, pressure on Netflix and the wider streaming sector could persist. The company expects a 26% operating margin in the fourth quarter, with job-cut costs weighing on it.

market impact

Netflix and streaming stocks: weak revenue and ad guidance puts pressure on the shares

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