Netflix’s stock took a nosedive on Wednesday, falling more than 10% after the streaming giant gave a forecast for the coming quarter that just wasn’t good enough for Wall Street. The lackluster outlook overshadowed a strong lineup of upcoming shows, including the final season of the hit series “Stranger Things.”
Investors have gotten used to Netflix consistently blowing past expectations, a performance that has sent its stock soaring over 360% in the last three years. But now, it seems the magic is wearing off. “Shares have enjoyed a strong run this year, so expectations were already high,” said one analyst. “There’s added pressure not just to deliver but to exceed.”
For the fourth quarter, Netflix predicted revenue of $11.96 billion, just slightly ahead of what Wall Street was expecting. Analysts at Wedbush called the guidance “underwhelming,” especially after so many quarters of blowout results.
The company is also facing growing questions about its other businesses. While Netflix has been pushing into advertising and video games, these efforts have been slow to take off. The company said it had its “best ad sales quarter in history,” but didn’t provide any actual numbers.
Making matters more complicated, Netflix stopped reporting its subscriber numbers earlier this year, so it’s harder than ever to tell how well the company is actually doing. While some analysts are telling investors to “buy the dip,” the big drop in the stock is a clear sign that Wall Street’s love affair with Netflix might be cooling down.
