Netflix

(AI video summary)

This video was created on 23 October 2025 for IG audiences by ausbiz.

NASDAQ code: NFLX

Netflix stock takes a hit

Netflix, the United States (US) streaming giant, has seen its shares fall sharply following a miss on quarterly profit expectations, sparking concerns about its valuation. The decline, attributed to a $619 million tax expense from an ongoing dispute in Brazil, overshadowed Netflix's announcement of its best advertising sales quarter, a figure which the company did not disclose.

Netflix's business model and expansion into gaming

Despite the recent setback, analysts remain optimistic about Netflix's long-term potential. They highlight its impressive average earnings growth of 21% over the past decade, supported by a robust business model and innovative algorithms. While Netflix's price-to-earnings (P/E) ratio is high, its ability to maintain strong revenue growth remains a key strength.

Netflix's strategy to diversify its offerings includes integrating gaming and expanding its content portfolio. The company is introducing video games to the platform, allowing users to use their phones as controllers, potentially tapping into a substantial market segment. This move is compared to Sony's strategy with PlayStation, aiming to make Netflix a central entertainment hub.

Investment outlook

As Netflix ventures into new areas, such as incorporating Spotify and offering ad-supported tiers, analysts are cautiously optimistic about its prospects. The platform's content library, combined with its innovative approach to streaming and gaming, positions it well for future growth. Long-term investors might view the recent share price drop as a buying opportunity despite short-term uncertainties.