Netflix Shares Tumble, Shed $9B In Value As CFO Lowers Margin Guidance

The streaming behemoth Netflix Inc. NFLX found itself in a market maelstrom as its market capitalization nosedived by a staggering $9 billion during Wednesday’s session.

The catalyst? A word of caution from the company’s CFO, Spencer Neumann, delivered at a Bank of America Conference.

Netflix shares plummeted, diving by over 5% during the afternoon trading, and shaping up to become the third-worst session endured by the streaming giant in 2023.

Neumann’s revelation about the company’s expected profit margins was at the center of the storm.

He offered a subdued forecast for operating margins, pegging them in the range of 18% to 20%, a far cry from the prevailing consensus, which stood firm at 22.1%. In an attempt to cushion the blow, he also stressed that Netflix is “nowhere near” its peak margins.

Netflix Drops Below Key Moving Averages

This stumble occurred on the heels of Netflix’s mixed performance in Q2, where the company underperformed revenue expectations but managed to outshine the profit consensus laid out by Wall Street analysts.

The performance of Netflix’s stock in 2023 mimicked closely that of the broader tech sector, tracking closely with the Invesco QQQ Trust QQQ.

However, signs of Netflix’s waning momentum came when its share price simultaneously breached both the 21-day and 50-day moving averages.

The dual setback signifies a potential shift to a bearish sentiment in the short term, prompting questions about whether a further pullback could be in the cards or whether bulls would seize the opportunity to buy the dip.