Moody's spares France a downgrade, but keeps the warning in place
3 min read
Finance / 3 MIN READ
Netflix's profit jumped 44%, and its shares still fell after hours
A 44% jump in profit usually earns a company some applause, yet Netflix's shares slid soon after its results came out. After the US market closed on Tuesday, October 20, Netflix reported that net income for the three months to September 30 rose to $3.66 billion from $2.55 billion a year earlier, while revenue grew about 12% to $12.87 billion. The shares, which had closed Tuesday's regular session at $68.69, fell about 6% in after-hours trading that evening to about $64.78, Yahoo Finance data show.
Netflix says its operating income beat its own forecast "due primarily to the timing of expenses," meaning some costs it expected in the third quarter will land in later months. Against analysts' expectations, the quarter was a modest win: earnings of 87 cents a share beat the 82 cents analysts polled by LSEG had expected, and revenue matched their forecast.
That near match helps explain why the quarter alone did little for the shares. A share price reflects what investors expect a company to earn in the future, so results that land close to predictions add little new information. A company's own forecast, called guidance, tends to carry more weight, because it comes from management and resets what investors expect the business to earn next.
Netflix's guidance fell short of those expectations, since it expects fourth-quarter earnings of 67 cents a share, against an average analyst forecast of about 73 cents, according to Reuters, and revenue of $13.44 billion, against about $13.51 billion expected, according to Yahoo Finance. Netflix also says the roughly 1,000 job cuts it announced on October 14 will take about 1.2 percentage points off its fourth-quarter operating margin, the share of revenue left after running costs, which it forecasts at 26%. Its revenue forecast is still about 12% above the same quarter last year, so the outlook describes a business that is growing more slowly than analysts had hoped.
The advertising outlook added to that slower picture, because Netflix cut its forecast for 2026 advertising revenue to about $2.7 billion from about $3 billion, a reduction of about 10%, blaming a "slightly slower than expected rollout of some ad product capabilities." Ads are meant to add growth on top of subscriptions, so a lower target suggests that source is building more slowly than planned.
Netflix also wrote that "there's some investor concern about our view hours growth," a measure of how much time members spend watching. That measure matters because more viewing gives Netflix room to raise prices and more slots to sell to advertisers. Netflix argues engagement "remains healthy," pointing to members' response to its 2026 price rises, but says it wants to "accelerate growth in view hours."
The regular session on Wednesday, October 21, which opens at 13:30 GMT, gives the first full-day reaction to the results. Netflix's next chance to show that viewing and advertising are picking up comes with its fourth-quarter report, expected in January.
