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Shares of Netflix (Nasdaq: NFLX) were sinking on Wednesday, down about 10% after the streaming leader released third quarter earnings.

The miss was primarily attributable to a specific matter — otherwise, Netflix would have beaten earnings estimates. It marks the first earnings miss in 2 years.

Many investors saw this as a reason to dump the stock, perhaps along with its somewhat lofty valuation. However, others will likely see this as an opportunity to scoop up shares of this streaming leader at a lower price.

• Revenue: $11.5B, up 17% year-over-year. This was in line with analysts’ expectations.
• Operating income: $3.25B, up 12% year-over-year.
• Operating margin: 28.2%, down from 29.6% in the same quarter of 2024.  
• Net income: $2.5B, up 8% year-over-year.
• Earnings: $5.87 per share, up 9% year-over-year. This was short of the consensus $6.97 per share estimate.  

In the letter to shareholders, co-CEOs Greg Peters and Ted Sarandos said the lower operating margin was due to an expense related to an ongoing dispute with Brazilian tax authorities. The expense was not in their forecast.

Absent this expense, we would have exceeded our Q3’25 operating margin forecast. We don’t expect this matter to have a material impact on future results,” the co-CEOs said.

KPop Demon Hunters sets record

Other than the tax dispute, it was a strong quarter. Netflix reached its highest view share ever in the US and the UK, two of its largest markets. In the US, the view share has risen 15% over the last 3 years to 8.6%, and in the UK the view share has increased 22% over that time to 9.4%.

In the US, all other streaming combined is 37.7%, while linear TV is 42.3%. In the UK, all other streaming is 26.7% and linear TV is 46.3%.

The big draw among series in Q3 was Wednesday, which had 114M views and Untamed with 87M views.

Among films, KPop Demon Hunters was by far the runaway favorite. With 325M views, it became Netflix’s most popular film ever. Happy Gilmore 2 was next with 126M views and a record 2.9 billion viewing minutes in its opening weekend. My Oxford Year had 81M views, while The Thursday Murder Club had 61M views.

Netflix also announced licensing agreements with toymakers Mattel and Hasbro for KPop Demon Hunters toys and merchandise.

Further, Q3 was the company’s best quarter ever for ad sales and it doubled its commitments in the US upfront.

Stranger Things will happen in Q4

 The long-awaited final season of the hit series Stranger Things is slated for release in Q4, so that should be a huge draw for Netflix. Other major events include live NFL games and boxing matches, and another Knives Out film.

In Q4, Netflix anticipates revenue growth of 17% and an operating margin of 23.9%, which would be up 2 percentage points year over year. For the full year 2025, Netflix expects $45.1B in revenue, up 16% and an operating margin of 29%, slightly below the expected 30% due to the Brazilian tax matter.

Several analysts boosted Netflix’s price target, including Evercore, which raised it to $1,500 per share and Rosenblatt, which lifted it to $1,530 per share. A few analysts lowered their targets, but maintained their buy ratings, including Wedbush and Piper Sandler, with targets of $1,400 per share. That’s still 25% over the current price.

Netflix stock is a bit pricey trading at 49 times earnings, but that should come down with today’s selloff and make Netflix a more attractive option for investors.  

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