Netflix Inc. reported its slowest sales jump in three years and forecast a fourth consecutive quarter of slowing growth, a projection that amplifies concerns about the performance of the world’s leading online TV network. Netflix delivered sales of US$12.9 billion in the third quarter, in line with Wall Street’s expectations, and forecast sales of US$13.4 billion in the year’s final three months, falling short of what analysts have predicted. The pace of growth has fallen from 17.6 per cent in the final quarter of last year to a projection of 11.5 per cent for this year’s fourth quarter. The company blamed its sales shortfall on the advertising business, which is on pace to deliver US$300 million less than the company expected. The shares slid 4.8 per cent as trading got underway Wednesday morning in New York. The stock is down 30 per cent this year, compared with a 13 per cent gain in the S&P 500. “I know we can do better,” Netflix co-chief executive Greg Peters said on a call with analysts Tuesday. “That better is our upside.” Over the past week, Peters and co-CEO Ted Sarandos have overhauled the company’s leadership to address what they see as a decline in programming quality . Netflix fired chief content officer Bela Bajaria and film chief Dan Lin just days after announcing cuts of six per cent of the staff, or about 1,000 people. The last time Netflix made such substantial reductions was in 2022, when it reported its first quarterly subscriber loss in more than 10 years. The company’s operating margin forecast for the fourth quarter of 26 per cent is affected by costs associated with the job cuts. Earnings of 87 cents per share in the third quarter exceeded analysts’ projections for 82 cents. Sarandos and Peters are walking a tightrope, seeking to assure investors that the company has a bright future while acknowledging things aren’t going as well as everyone would like . Netflix remains a clear leader in streaming . It has more than 325 million subscribers, which the company says equates to almost 1 billion viewers. It accounts for more viewing than any other Hollywood streaming service. But Hollywood studios don’t overhaul their programming teams when everything is hunky dory. Netflix has gone months without a massive, culture-shaping hit in film or TV and has struggled to lure viewers to both new shows and new seasons of older shows. Sarandos and Peters brought in Peter Rice, a veteran film and TV executive who previously served as chairman of general entertainment at Walt Disney Co., and before that as president of 21st Century Fox, to replace Bajaria. Long a Wall Street darling, Netflix has faced growing skepticism ever since it made a play to buy the streaming and studios businesses of Warner Bros. Discovery Inc. After losing out in its bid, Netflix has struggled to convince investors it has a viable growth strategy. The stock is down about 25 per cent this year and more than 40 per cent from a year ago. Netflix is paying US$200 million for 2027 Women’s World CupNetflix analysts are souring on the stock as growth fears mount Investors and analysts have pestered Netflix’s leadership about stagnant engagement. Netflix’s share of United States TV viewership sits at 7.8 per cent, according to ratings tracker Nielsen, far behind YouTube, which captures about 14 per cent. And Netflix viewers watched only two per cent more programming in the first half of the year than a year earlier. “Investors will need, in short order, some indications toward confidence in the growth trajectory that this powerful, global platform should be able to provide,” David Joyce, an analyst at Seaport Research Partners, said in a note before the results were released. Bloomberg.com
Netflix shares slip as slowing sales growth amplifies concerns
