Netflix’s Stock Is Down by 6.5%: What Went Wrong?

According to stock market data and reports for October 2025, Netflix shares dropped eleven times so far. Netflix’s stock price dropped significantly again on October 21, 2025. The stock closed at $1,160 per share, which was 6.5% lower than the previous session. The primary reason for this dip is that the company missed its profit expectations for the July-September quarter (Q3). Does this mean the investors have something to worry about? Do tax changes by the Brazilian government have something to do with it? For all that, learn more. 

What Caused Netflix to Miss Its Earnings Target?

The tax dispute in Brazil was an unexpected scenario for Netflix. Right now, the company is dealing with it. What exactly happened?

• Back in 2022, Netflix settled the tax issue with the Brazilian government, paying $619 million, and it’s still an ongoing issue.
• This payment was recorded as an expense, reducing the company’s Q3 profits by $400 million that year.
• Netflix stated that without the tax payment, its profits would have been significantly higher.

Netflix’s Recent Financial Performance

Netflix’s profits may be hit by the tax, but the company is doing well in other areas:

• The company earned $3.24 billion in operating income (meaning the profits before taxes and interest payments).
• It earned $2.66 billion in free cash flow (meaning the extra cash after all the expenses). This number beat Wall Street’s expectations.
• It also forecasted its full-year free cash flow as $9 billion. 

What Helped Netflix This Quarter

Netflix’s strong lineup of shows and movies has attracted record levels of viewership. The list includes shows like:

• KPop Demon Hunters (it’s the most popular movie this quarter on Netflix),
• Wednesday – Season 2.
• A sequel to the comedy “Happy Gilmore.”
• The boxing match between Canelo Álvarez and Terence Crawford.

And there are more shows lined up for the future, like:

• Final season of “Stranger Things.”
• A sequel to “Knives Out.”
• New movies by Guillermo del Toro and Kathryn Bigelow.

Investors’ Concerns

Despite such a good viewership and business numbers, the investors are still worried about two main things:

• Viewer time – Although Netflix users have come close to 1 billion, the declining viewer time is concerning. This means that the users are spending less time than before.
• AI-created content – Not at the moment, but they fear the AI-generated videos could become bigger than Netflix.

Plus, the demand for free streaming platforms like YouTube, Roku, and Tubi is seeing faster growth. 

What’s Next for Netflix

For a better clash flow, Netflix is planning to:

• Buy back its shares.
• It wants to invest more in new shows and movies.
• Showing interest in acquiring certain assets from Warner Bros. Discovery Inc.

Why Netflix Shares Dropped? | Where Netflix Went Wrong?

The biggest streaming platform, Netflix lost 200k subscribers and 37% of their shares dropped in a day. Find out the reasons and where Netflix went wrong?

StartupTalky- Business News, Insights and StoriesDamini Bhandary