Netflix Shares Sell Off After Q3 Earnings Miss, Warning About Brazilian Tax Dispute; Ad Growth Robust

Core Insights - Netflix's third-quarter earnings fell short of Wall Street expectations, with earnings per share at $5.87 compared to the consensus of $6.97, primarily due to a dispute with Brazilian tax authorities affecting operating margins [1][2] - The company reported revenue of $11.51 billion for the June-to-September period, aligning with targets, but operating margin was 28%, below the guidance of 31.5% [1][2][4] Financial Performance - Revenue growth was 17% year-over-year, driven by higher ad revenue, price increases, and subscriber growth [4] - The company achieved its best ad revenue quarter in history and is on track to double ad revenue for the full year compared to 2024 [4] Viewership and Content Strategy - The Season 2 premiere of a key series in September generated over 7 billion viewing minutes, significantly boosting viewership [3] - The Addams Family spinoff played a crucial role in Netflix's advertising strategy [4] AI and Future Outlook - The company expressed an optimistic outlook on the impact of AI, stating it is well-positioned to leverage advances in AI for production and user experience [5][6] - Netflix highlighted the empowering nature of Generative AI for creators, showcasing its application in recent productions [6]