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Netflix Stock Slumps 6% As Q3 Earnings Miss Estimates

Aditya Raghunath4 minute read
Reviewed by: Thomas Richmond
Last updated Oct 22, 2025

Key Stats for Netflix Stock

  • Price Change for $NFLX stock: -6.5%
  • Current Share Price: $1,161
  • 52-Week High: $1,341
  • $NFLX Stock Price Target: $1,350

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What Happened?

Netflix (NFLX) stock dropped around 6% after the streaming giant reported third-quarter earnings that missed analyst expectations.

The culprit? An unexpected tax dispute with Brazilian authorities that knocked earnings off course.

The company incurred a surprise expense due to a 10% tax on payments made by Brazilian operations to Netflix entities outside the country.

This tax wasn’t in Netflix’s original forecast, and the company decided to take the hit this quarter after determining it would likely lose its legal challenge.

CFO Spence Neumann was quick to clarify that this isn’t a Netflix-specific problem. The tax applies broadly across industries, not just streaming companies.

Despite the earnings miss, Netflix stock still delivered on revenue expectations. The company brought in $11.51 billion for the quarter, in line with analyst forecasts.

Revenue rose by 17% compared to last year, driven by growth in membership, price increases, and stronger advertising sales.

Netflix Stock Earnings vs. Estimates (TIKR)

Looking ahead, Netflix expects another 17% revenue bump in the fourth quarter as these positive trends continue rolling.

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What the Market Is Telling Us About NFLX Stock

The market’s reaction to NFLX stock indicates that investors dislike surprises, even when the underlying business appears healthy.

Notably, Netflix posted its best advertising quarter ever and is on track to more than double its ad revenue this year. Moreover, Netflix raised prices in January, and customers are still sticking around, which proves people see real value in the service.

The Brazilian tax issue is a one-time headwind, not a sign of deeper problems. Management emphasized that they don’t expect it to materially impact future results.

Netflix adjusted its full-year operating margin forecast from 30% down to 29% because of the tax matter, but that’s still an impressive margin for a content-heavy business.

Netflix Stock Valuation Model (TIKR)

Content remains Netflix’s secret weapon. “KPop Demon Hunters” has become the platform’s most-watched film ever with over 325 million views.

The company is now expanding into toys, games, and live experiences around the property. The fourth-quarter content slate looks stacked with the final season of “Stranger Things,” new installments of hit shows like “The Diplomat,” and high-profile films from major directors.

While other media companies like Warner Bros. Discovery consider selling themselves and Comcast spins off cable networks, Netflix stock continues to lead the streaming pack.

The earnings stumble doesn’t change that Netflix remains the king of streaming, and its 80% year-to-date gain shows investors still believe in the long-term story.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!

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