Netflix’s blockbuster streak appears to be losing steam as investors react to a softer-than-expected outlook. Shares fell more than 10% after the company’s fourth-quarter forecast showed only modest revenue growth, despite new releases like Stranger Things and KPop Demon Hunters.
Revenue reached $11.5 billion in the third quarter, roughly matching projections, with $11.96 billion expected in the next. However, with the company no longer disclosing subscriber numbers, investors are focusing on profitability and the performance of newer ventures like advertising and gaming — both of which remain in early stages.
A $619 million tax charge in Brazil dented quarterly profits, and analysts lowered price targets following the results. Netflix’s forward price-to-earnings ratio of nearly 40 has fueled skepticism about whether growth can continue at past rates.
Analysts warn that without stronger ad revenue or subscription growth, Netflix may struggle to sustain its high valuation. Yet others argue the company’s market dominance and pricing flexibility still give it an edge over competitors.
