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Netflix Reports Earnings Miss Due to Tax Dispute
Netflix (NASDAQ: NFLX) incurred $619 million in unexpected expenses last quarter from a tax dispute with Brazilian authorities, contributing to a significant earnings miss. For Q3, the company reported revenue of $11.51 billion, which met expectations, but the adjusted earnings of $5.87 per share fell short of the $6.97 anticipated by Wall Street.
This expense impacted Netflix’s net income of $2.5 billion, reducing the operating margin by over 5 percentage points. The company’s stock trades at a price-to-earnings multiple of 50, significantly higher than the S&P 500 average of 25, prompting concerns about its valuation despite a 17% increase in revenue. Analysts maintain a 12-month price target of approximately $1,353 per share, over 20% above current levels.
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