Netflix shares fall on weaker Q4 guidance, growth slowdown fears

(Sharecast News) - Netflix shares fell overnight after the streaming giant paired solid third-quarter results with a weaker-than-expected outlook, fuelling concerns that growth is beginning to slow.

The company reported third-quarter revenue of $12.87bn, up 11.8% year-on-year, while net income rose to $3.66bn. Operating margins also topped expectations, reflecting continued pricing power and cost discipline.

However, Netflix forecast fourth-quarter revenue of $13.4bn, slightly below Wall Street estimates, and cut its full-year advertising revenue target to about $2.7bn from $3.0bn, citing a slower rollout of advertising capabilities.

Investors were also focused on softer engagement trends and signs that subscriber growth is normalising after several years of expansion. The update follows a broad restructuring programme that included significant job cuts and management changes.

The update comes days after Netflix cut around 1,000 jobs, equivalent to about 6% of its workforce, and overhauled its content leadership as part of a restructuring aimed at improving execution and refocusing the business on growth.

Despite the more cautious outlook, Netflix said it remains committed to expanding its advertising business and investing in content, with plans to launch ad-supported services in additional international markets next year.

Reporting by Frank Prenesti for Sharecast.com