Netflix Q3 Profit Tops Estimates but Lower Ad Guidance Drags Shares Down 4%

Netflix reported third-quarter earnings above Wall Street expectations on Tuesday, but shares fell 4.1% in after-hours trading to $65.90 after the company lowered its advertising sales guidance, stoking concerns about slowing revenue growth. The streaming company earned $3.66 billion, or 87 cents per share, for the July-September period, up 44% from $2.55 billion, or 59 cents per share, a year earlier. Revenue rose 12% to $12.87 billion. Analysts surveyed by FactSet had forecast earnings of 82 cents per share on revenue of $12.87 billion. The report follows last week's announcement that Netflix will cut roughly 6% of its workforce—nearly 1,000 positions—in its largest round of layoffs in years. The company also named Peter Rice to replace Chief Content Officer Bela Bajaria, effective Oct. 26. Netflix shares are down about 25% year to date amid competition from Amazon's Prime Video and Disney+. "Investors are concerned about soft engagement trends, decelerating revenue growth, a slower margin expansion outlook, and most recently content executive leadership changes," said John Belton, portfolio manager at Gabelli Funds.