Netflix Q3 Earnings Miss Sparks Selloff, But Long-Term Growth Prospects Remain Intact
Netflix shares tumbled nearly 8% this week after reporting weaker-than-expected Q3 earnings, with EPS of $5.87 falling sharply below the $6.97 consensus. The decline stemmed largely from a one-time $619 million tax dispute charge in Brazil that compressed operating margins to 28% versus guidance of 31.5%.
Despite the headline miss, the streaming giant demonstrated meaningful progress in key growth initiatives. Revenue met expectations at $11.51 billion, underscoring fundamental business resilience. The market's knee-jerk reaction appears disproportionate to what remains a dominant subscription platform with compounding potential.
Value investors now see an attractive entry point as shares trade at reasonable valuations post-selloff. The earnings stumble highlights Netflix's ongoing evolution from growth stock to cash-flow powerhouse - a transition that often creates volatility but rewards patience.
