Netflix shares sank nearly 9% in after-hours trading after the streaming giant reported second-quarter revenue that fell short of analyst expectations and issued third-quarter guidance that missed Wall Street’s $13 billion estimate.
The company reported Q2 earnings per share of $0.80, narrowly beating consensus estimates of $0.78, but revenue of $12.56 billion came in below the $12.8 billion analysts had projected. The miss was attributed to slower-than-expected subscriber growth in certain international markets and higher content production costs.
Netflix’s third-quarter revenue guidance of approximately $12.7 billion also fell short of the $13 billion analysts were expecting, contributing to the negative market reaction. The company cited ongoing investments in content production, including the expansion of its live programming slate and the integration of generative AI tools into production workflows.
During the earnings call, Netflix executives disclosed that roughly 300 titles on the platform have used generative AI tools in some capacity, primarily in post-production for tasks such as visual effects, crowd enhancement, and worldbuilding shots. While the company sees AI as a cost-saving opportunity over the long term, the short-term investment requirements weighed on margins.
Netflix added approximately 6.2 million net new subscribers during the quarter, bringing its global subscriber base to over 290 million. However, growth in the Asia-Pacific region slowed compared to the previous quarter, and the company faced headwinds from currency fluctuations.
Despite the sell-off, several analysts maintained buy ratings on Netflix stock, noting that the company’s long-term competitive position remains strong given its scale, content library, and growing advertising business. The stock has declined roughly 40% from its 52-week high as the broader streaming sector faces margin pressure.
This article was adapted from BeInCrypto. Read the original here.
