Netflix (NFLX) shares plunged nearly 9% in after-hours trading on Thursday after the streaming giant delivered a weaker-than-expected third-quarter forecast, deflating bullish predictions from Elon Musk’s Grok AI just 24 hours earlier.
The company projected third-quarter revenue of $12.9 billion and diluted earnings of $0.82 per share, missing Wall Street estimates of $13 billion and $0.84 per share. This guidance points to quarterly revenue growth slowing to 11.7%—its weakest pace since late 2023—down from 16.2% in Q1 and 13.4% in Q2. While second-quarter sales rose 13.4% to $12.6 billion and operating margin reached a solid 33.4%, the free cash flow miss stole attention: the company generated just $1.5 billion, far below the $2.9 billion expected and down from $2.3 billion a year ago.
PP Foresight analyst Paolo Pescatore told Reuters the forecast reflected “management caution and a naturally maturing growth profile,” adding that Netflix enters a steadier phase with “considerably less room for error given the always-high expectations.” The results do not signal a business breakdown, but they expose a gap between respectable execution and the premium valuation investors have assigned. Forrester’s Mike Proulx warned that it remains unclear whether consumers want Netflix to become more like YouTube, raising engagement concerns.
Only a day before the earnings, Grok AI had painted a rosy picture—predicting a 15–25% rally to $85–$92 based on ad-tier momentum, 325M+ paid subscribers, and a fast recovery from oversold conditions. That thesis hinged entirely on a clean earnings beat, which did not materialize. Instead, the stock fell from $73.83 to around $67 in late trading, erasing the AI-driven optimism.
For cryptocurrency markets, the Netflix earnings miss carries no direct impact, but it may intensify broader risk-off sentiment among investors already cautious about tech and growth assets. With no crypto-specific catalysts in the event, the immediate effect on digital assets remains negligible.
