Netflix falls 5% after hours on weak guidance and ad revenue miss

Netflix beat third-quarter estimates on both revenue and earnings, but investors sold the stock anyway. The reason is the outlook.

The company guided for fourth-quarter earnings of $0.67 per share, well below Wall Street's $0.73 estimate. Revenue guidance of $13.44 billion also fell short of the $13.51 billion analysts had pencilled in.

The ad business added to the disappointment. Netflix cut its full-year advertising revenue forecast from $3 billion to $2.7 billion, blaming a slower-than-expected rollout of its ad products.

The results land at an awkward moment. Netflix unveiled a major content leadership shake-up last week, with chief Bela Bajaria and film head Dan Lin both departing. Around 1,000 jobs were cut at the same time.

The stock was already down 44% over the past year before Tuesday's report, weighed down by slowing viewership growth and intensifying competition from YouTube and free streaming rivals.

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