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Netflix shares fall more than 10% after earnings despite record revenue
The stock slid to a 52-week low after revenue growth decelerated and missed expectations, while the company posted operating margins above guidance and its largest buyback in history.
Netflix Inc. stock sank to a 52-week low after its latest earnings report, with shares falling more than 10% in the aftermath despite the streaming company posting record revenue, according to MarketBeat Ratings.
The report said the earnings results themselves were stronger than investors appeared to price in. Revenue rose to an all-time high, operating margins came in comfortably above Netflix's guidance, and the company announced what it described as its largest share buyback in history.
MarketBeat Ratings attributed the sell-off mainly to expectations rather than deterioration in the business. Revenue growth, while still robust, decelerated from the prior quarter and missed expectations, prompting investors to recalibrate their outlook.
The piece also pointed to the valuation shift after the pullback, saying Netflix now trades at a price-to-earnings ratio of 23, compared with 57 a year ago and 285 from 10 years earlier. It framed the combination of record revenues, expanding margins, and the lower valuation, alongside the large capital return, as the basis for viewing the drop as potentially overdone.