Netflix earnings | Better-than-expected profits can’t save the stock: down 5% after hours
$NFLX Bottom line up front: Q3 profit beat expectations, but the stock is taking its cue from guidance—down about 5% after hours to around $65.
Earnings highlights, item by item (USD):
EPS was $0.87 vs. expectations of $0.82—a beat. Net income was $3.66 billion, up nearly 44% year over year;
Revenue was $12.874 billion, up 11.8% year over year, essentially in line with expectations of $12.87 billion;
Operating margin was 34.6%, above expectations, but the company said this was due to the timing of expenses—not genuine cost savings;
Free cash flow was $2.884 billion vs. expectations of about $3.2 billion, a miss.
Guidance was the real market disappointment: all three figures came in below expectations:
Q4 revenue guidance: about $13.442 billion (vs. expectations of about $13.5 billion);
Q4 EPS guidance: $0.67 (vs. expectations of $0.73); operating margin guidance: 26% (vs. nearly 28% expected, with severance costs included);
Full-year revenue guidance narrowed to about $51.1 billion, near the low end of the previous $51.0–$51.4 billion range;
Full-year free cash flow guidance was cut from about $12.5 billion to about $12.0 billion;
2026 ad revenue guidance was cut from about $3.0 billion to about $2.7 billion, as the product rollout has been slower.
The market is also focused on two other things: viewing time has declined following price hikes (management said churn improved year over year, but acknowledged the need to “accelerate viewing time growth”), and pressure from Disney+/YouTube. The stock closed at $68.69 (-1.66%), then dipped to just above $64 after hours. It’s down nearly 27% year to date.
What to watch next: stocks often face continued selling the day after earnings. $64–$65 is the year-to-date low zone (the 52-week low is $65.08). Holding there could allow a recovery; breaking below it could mean new lows. Key levels are marked on the chart.
Support: $65 (year-to-date low zone)
Resistance: $68.70 (yesterday’s close / gap area)
I’m staying on the sidelines with a bearish lean: three guidance cuts in a row plus a lower ad revenue outlook make an immediate reversal tomorrow seem unlikely. Unless it can reclaim $68.70 before the market opens, I’ll admit I’m wrong and turn bullish.
Pick one: do you think this is a golden buying opportunity created by the sell-off, or just another leg down?
⚠️Just my personal rambling—not investment advice.
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