Netflix earnings forecast disappoints, shares tumble
Netflix shares dropped nearly 9% after the company issued third-quarter revenue and earnings forecasts that missed Wall Street expectations. The company is shifting its focus toward advertising, live events, and gaming to sustain growth as its subscriber base matures.
Why it matters
The market reaction reflects investor skepticism regarding Netflix's ability to maintain rapid growth in a highly competitive streaming landscape.
Netflix has forecast third-quarter revenue and earnings that fell short of Wall Street targets and said it would cut the frequency of viewing-hours reports as the company seeks new avenues of growth.
Shares of Netflix fell nearly 8.6% in after-hours trading to $67.99 on Wall Street last night.
The company led by co-CEOs Ted Sarandos and Greg Peters said it expected $12.86 billion in revenue from July to September and diluted earnings per share of 82 cents. Analysts had forecast $13 billion in revenue and diluted EPS of 84 cents, according to LSEG.
After years of rapid subscriber gains, Netflix is working to grow by building advertising, live events and video games. The company's stock has lost about a fifth of its value this year as investors question how it will sustain growth.
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