Netflix Cut Its Ad Revenue Forecast by $300 Million. Does That Matter More Than Its Earnings Beat?

Netflix beat Q3 earnings expectations with EPS of $0.87 vs. $0.82 estimate, but the stock fell 6% after hours due to concerns about slowing growth and a $300 million cut to its ad revenue forecast (from $3B to $2.7B). While advertising represents less than 6% of revenue, it was viewed as a key growth driver. Management attributed the shortfall to technical delays rather than weak demand, but investors remain skeptical as Netflix faces a "show-me story" requiring proof of growth acceleration and improved engagement.