Netflix missed Wall Street's third-quarter earnings targets due to unexpected expenses from a tax dispute with Brazil, while delivering estimates that beat Wall Street's expectations for the rest of the year.
Shares of the video streaming giant fell 5.6 percent to $1,171.24 in after-hours trading Tuesday. They had surged 39 percent this year before the earnings release.
Netflix is seeking to expand into new areas such as advertising and video games, having attracted more than 300 million customers worldwide. It faces competition from YouTube, Amazon's Prime Video service, Disney+, and others.
Netflix reported net income of $2.5 billion and earnings per share of $5.87 for the months of July through September, a period during which the K-pop animated film Demon Hunters became the most-watched film in Netflix history.
The London Stock Exchange Group noted that net income fell short of analysts' expectations of $3 billion, and that earnings per share fell short of estimates of $6.97.
Revenues were in line with expectations, reaching $11.5 billion.
Netflix reported an operating margin of 28 percent for the third quarter. The company said that without a Brazilian tax expense of approximately $619 million, the margin would have exceeded the company's guidance of 31.5 percent, adding that it does not expect this matter to have a material impact on future results.
For the fourth quarter, Netflix forecast revenue of $11.96 billion, compared to Wall Street's estimate of $11.90 billion. The company expected earnings per share to be a penny above analysts' target of $5.45.
