Netflix, the streaming giant, stumbled in its third-quarter earnings, rattled by an unexpected $619 million tax dispute in Brazil. On October 21, 2025, the company reported a net income of $2.5 billion and earnings per share of $5.87 for July-September, falling below Wall Street’s expectations of $3.0 billion and $6.97.
Revenue hit $11.5 billion, aligning with forecasts, but investors weren’t impressed. Netflix’s stock (NFLX), which soared 39% in 2025, dropped 5.6% to $1,171.24 in after-hours trading, as shown in the finance card above.
The tax issue dragged the operating margin to 28%, though Netflix noted it would have hit 31.5% without the expense. The company downplayed future impacts, focusing instead on a robust Q4 outlook.
Looking Ahead to Q4
Netflix projected $11.96 billion in revenue for the fourth quarter, edging out Wall Street’s $11.90 billion estimate, with earnings per share at $5.45, a cent above analyst targets.
The company is banking on blockbuster releases like the final season of Stranger Things and two live NFL games on Christmas to drive momentum. “We’re ending 2025 strong with an exciting slate,” Netflix told shareholders, signaling confidence despite the Q3 hiccup.
The quarter wasn’t all gloom, K-Pop Demon Hunters became Netflix’s most-watched movie ever, and ad sales hit a record high, though exact figures weren’t shared. Analysts suggest subscriptions, not ads, will fuel growth, with new ventures like gaming still in early stages.
Navigating a Shifting Media Landscape
Netflix, boasting over 300 million users, faces fierce competition from YouTube (GOOGL), Amazon’s Prime Video (AMZN), Disney+ (DIS), and others, with stock prices at $250.46, $222.03, and $114.30, respectively, per the finance card above.
The media world is in flux, with generative AI creating short videos and rumors swirling about Warner Bros Discovery’s potential sale.
Netflix was reportedly eyeing its assets, but Co-CEO Ted Sarandos played it cool, saying the company is “picky” about acquisitions. “We’re not chasing legacy networks, but we’d consider valuable content,” he told analysts.
Co-CEO Greg Peters brushed off concerns about industry mergers. “Bigger competitors don’t change our game plan,” he said, emphasizing Netflix’s focus on its own path.
Investor Jitters and Market Context
The Brazilian tax hit spooked investors used to Netflix’s breakneck growth. Analyst Paolo Pescatore called it a “solid quarter” despite the setback, pointing to strong fundamentals.
However, eMarketer’s Ross Benes noted that ad and gaming revenue remain small, with subscriptions driving the bus. The market reflected mixed signals, with the Dow up slightly, the S&P 500 flat, and Nasdaq dipping.
A Resilient Giant
Netflix’s Q3 miss hasn’t dimmed its ambition. With 2025 growth projected at 3.5%, the company is doubling down on content and new ventures like live sports and gaming. The Brazilian tax sting hurt, but Netflix’s knack for reinvention keeps it ahead.
As competitors bulk up and AI reshapes media, Netflix’s focus on quality content and strategic growth could cement its lead.
With Stranger Things and NFL streams on deck, the streaming titan is poised to finish 2025 with a bang, even as investors watch closely.
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