Netflix shares fall after lower ad-sales guidance raises growth concerns
Netflix lowered its advertising sales guidance, and its shares fell as investors worried about revenue growth. The company reported third-quarter profit of $3.66 billion, up 44% from a year earlier, while revenue rose 12% to $12.87 billion.
AI-assisted synthesis · Based on 2 independent reports from 5 outlets · Article text read from 1 of 2 reports · 1 article captured only in partHow it's made
View timeline · 5 entriesWhat happened
Key facts
- Netflix reported third-quarter profit of $3.66 billion, or 87 cents per share, compared with $2.55 billion, or 59 cents per share, a year earlier.
- Netflix had announced layoff plans the previous week.
- Revenue increased 12% to $12.87 billion from $11.51 billion.
The brief
Netflix lowered its advertising sales guidance, and its shares fell as investors worried about revenue growth, according to the Niagara Falls Review. The company reported third-quarter profit of $3.66 billion, or 87 cents per share, compared with $2.55 billion, or 59 cents per share, in the same quarter a year earlier.
Revenue increased 12%, reaching $12.87 billion from $11.51 billion. The results exceeded FactSet-surveyed analysts’ average earnings forecast of 82 cents per share. Their revenue estimate was $12.87 billion, matching the amount Netflix reported.
The Niagara Falls Review attributed the share decline to concern about the company’s growth outlook after it cut its advertising sales guidance. The earnings report did not erase investor concern about revenue growth.
The Eagle-Tribune and myMotherLode headlines also linked the share decline to growth worries, while CNBC’s headline specified concerns about advertising and revenue guidance. Those headlines identify the same broad market reaction, but do not provide further figures or explanations.
Netflix had also announced plans the previous week to reduce its workforce by about 6%, or nearly 1,000 positions. The company described the planned layoffs as part of wider “organizational changes.” The Niagara Falls Review reported the plans alongside the earnings results; it did not say that the layoffs caused the share decline or connect them to the advertising guidance.
As of Tuesday’s close, Netflix shares were down about 25% for the year to date. The reported quarterly figures offer a counterpoint: profit rose 44% year over year and revenue climbed 12%, even as the reduced advertising outlook drew investor concern.
The company also released “La Bola Negra,” a Spanish film about three gay men whose interconnected lives span the early 20th century, the Spanish Civil War and the modern day. The film cost $15 million to make, and its release in four theaters brought in $313,391 over the weekend through Monday.
The Niagara Falls Review said it was expected to challenge “The Odyssey” for best picture.
Why it matters
- Netflix investors faced a documented growth concern tied to lower advertising sales guidance, alongside a 12% year-over-year revenue increase to $12.87 billion.
- The company’s reported profit rose 44% to $3.66 billion, while its shares were down about 25% year to date as of Tuesday’s close.
- Netflix said it planned to cut nearly 1,000 positions, about 6% of its workforce, as part of wider organizational changes.
What to watch next
- Whether Netflix’s reduced advertising sales guidance continues to shape investor concerns about revenue growth.
- Whether the company carries out its announced workforce reduction of nearly 1,000 positions.
- How Netflix’s reported revenue growth compares with the $12.87 billion analysts surveyed by FactSet had forecast.
How it's being covered
Coverage analysisShow details5 source articles · 5 unique outlets · 2 distinct reportsOutlet political mix: Center Only· 5 CenterWhere the outlets are based: US/Canada 80% · Unknown 20%
- Coverage is currently concentrated among Center-rated outlets (5 of 5 rated sources); comparatively few Left or Right-rated outlets have published on the event.
- Coverage is currently concentrated among outlets based in US/Canada (4 of 5 geographically-identified sources).
How outlets' accounts compare
Timeline
Developments from this story's sources, dated background we compiled and fact-checked, and our earlier coverage. Each row says which.- Reed Hastings and Marc Randolph founded Netflix as a DVD-by-mail service.Background · compiled and fact-checked by Updat3
- Netflix launched its streaming service.Background · compiled and fact-checked by Updat3
- In 2013, it released *House of Cards*, its first major original series, beginning a broader investment in exclusive programming that distinguished its streaming service from its DVD business.Background · from our historical context
- Netflix said it would introduce a lower-priced subscription tier with advertising.Background · compiled and fact-checked by Updat3
- That plan had launched in the United States on November 3, 2022, as Netflix sought a new revenue stream alongside subscriptions.Background · from our historical context
How we got here
In May 2024, Netflix said it would build its own advertising-technology platform, with a rollout planned for 2025, after initially relying on Microsoft’s ad technology for its lower-priced plan with commercials. That plan had launched in the United States on November 3, 2022, as Netflix sought a new revenue stream alongside subscriptions.
Netflix introduced the ad-supported tier after reporting subscriber losses in the first half of 2022; in April of that year, it also announced plans to test paid sharing beyond household accounts. Netflix began streaming films and television shows in 2007, after starting in 1997 as a DVD-by-mail rental service.
Original sources
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