Netflix cut its advertising forecast, and the shares fell about 5% after the close

Netflix

Netflix closed Tuesday at US$68.69, down 1.66%, ahead of its results. Once they landed, the shares fell another 5% or so in after-hours trading.

The quarter itself was fine. Revenue rose 12% to US$12.9 billion. Earnings came to 87 US cents a share, ahead of the 82 cents Netflix had guided to, and the operating margin rose to 34.6% from 28.2% a year earlier.

The forecasts did the damage. Netflix now expects about US$2.7 billion of advertising revenue this year, down from about US$3 billion. It blamed a slower rollout of some of its advertising tools.

Chart: Netflix's sales kept rising. Its value fell this year. Two scales, US$bn: revenue by calendar year on the left, market value at year end on the right, from 397.3 in 2025 to 285.9 before Tuesday's results. — This story’s chart of the day: the numbers, the dark version and the animated version are on its own page. The chart’s page →

The December quarter looks softer too. Netflix expects earnings of 67 US cents a share, and the job cuts announced last week take about 1.2 percentage points off its margin.

There is a local footnote. The cheaper plan with ads arrives in New Zealand in March 2027, in the first batch of the 15 countries getting it next year.

Yeah, but

the advertising cut is US$300 million in a business heading for US$51.1 billion of revenue this year. Our read is that the number matters less than the reason. Netflix has pitched advertising as its next big source of growth, and a slow start says something about how ready the product is.

This story ran in Ad Break Wednesday 21 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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