Netflix misses Q3 earnings targets due to tax dispute in Brazil

Core Viewpoint - Netflix missed Wall Street's third-quarter earnings targets due to an unexpected expense from a dispute with Brazilian tax authorities, but provided a forecast slightly ahead of Wall Street projections for the remainder of the year [2][3]. Financial Performance - Netflix reported a net income of $2.5 billion and diluted earnings per share of $5.87 for the third quarter, falling short of analyst expectations of $3 billion and $6.97 respectively [4]. - Revenue matched forecasts at $11.5 billion, while the operating margin was reported at 28%. Without the Brazilian tax expense of approximately $619 million, the margin would have exceeded the company's guidance of 31.5% [6]. Market Reaction - Following the earnings report, Netflix shares fell by 6.3% to $1,163.80 in after-hours trading, despite having risen 39% earlier in the year [3]. Growth Strategies - Netflix is exploring growth in new areas such as advertising and video games, having attracted over 300 million customers globally. The company faces competition from platforms like YouTube, Amazon Prime Video, and Disney+ [5]. - The company recorded its best ad sales quarter in history for Q3, although specific figures were not disclosed [8]. Future Outlook - For the fourth quarter, Netflix forecasts revenue of $11.96 billion, slightly above Wall Street's projection of $11.90 billion, and expects diluted earnings per share of $5.45, a penny ahead of analysts' targets [8]. - Upcoming releases include the final season of "Stranger Things" and live streaming of NFL games, which are expected to contribute to positive momentum [9].