Netflix Inc (NASDAQ:NFLX) stock plunges 9.92% (As on October 22, 11:40:42 AM UTC-4, Source: Google Finance) after the company missed Wall Street’s third-quarter earnings estimates due to an unforeseen expense from a Brazilian tax dispute. The online streaming platform posted quarterly operating income of $3.24 billion, roughly $400 million less than its forecast and analyst estimates, Bloomberg reported. Netflix reported an operating margin of 28%, below its forecast of 31.5%. The company said it would have exceeded its margin target excluding that charge and doesn’t expect the issue to materially affect future results.

Moreover, Netflix said “engagement remains healthy” thanks to a particularly strong content slate in the third quarter. That included the Canelo vs. Crawford fight, which drew over 41 million global viewers and was the most-watched men’s championship boxing match of the century, according to the company. Animated breakout hit “KPop Demon Hunters” also became Netflix’s most-viewed film of all time, with 325 million views, underscoring the streamer’s ability to generate massive hits from relatively unknown IP. Alongside its content push, executives have pointed to the $7.99 ad-supported tier as a longer-term driver of user growth, with the company reporting its strongest ad sales quarter to date. Netflix said it now has a “solid foundation” and is “increasingly confident” in the outlook for its ads business, noting that ad revenue is on track to more than double in 2025 from a still-small base following a US upfront that saw commitments more than double year over year.

NFLX in the third quarter of FY25 has reported the adjusted earnings per share of $5.87, missing the analysts’ estimates for the adjusted earnings per share of $6.94. The company had reported the adjusted revenue growth of 17 percent to $11.51 billion in the third quarter of FY25, missing the analysts’ estimates for revenue of $11.52 billion, according to Bloomberg consensus.

The company guided to revenue for the current quarter above Wall Street expectations, forecasting Q4 revenue of $11.96 billion compared to the $11.90 billion analysts polled by Bloomberg had expected. Earnings are also expected to exceed expectations for the quarter. The company sees $5.45 a share, higher than analyst estimates of $5.42.

For full-year 2025, Netflix expects revenue of $45.1 billion, toward the upper end of its previous $44.8 billion to $45.2 billion forecast range. Looking ahead, Netflix now forecasts a 2025 operating margin of 29%, down slightly from its prior expectation of 30%, reflecting the impact of the tax matter.