Netflix's Earnings Came With a Jump Scare. Why the Stock is the S&P 500's Biggest Loser.

Even the "KPop Demon Hunters" were no match for the jump scares in Netflix's (NFLX) latest earnings.

The streaming giant has been riding high on the success of the Korean cultural import—its animated superhero girl group has been a record-breaking hit—but its third-quarter report featured an unusual tax expense amid heightened investor expectations. Investors pulled away from the shares in response, with the stock falling some 10% in recent trading to be the biggest losers in a sliding S&P 500—and taking some of the gloss off a mostly-strong 2025.

The big terror in Netflix's quarter was a $600 million-plus expense described by CEO Spencer Neumann as a "unique tax" that recently turned into a "cost of doing business in Brazil." The country's Supreme Court ruled in August that its 10% tax levied on cross-border payments, royalties, and services could apply to a broader range of transactions in a case involving a different company, he explained. Given the likelihood of that ruling applying to the streaming company, Neumann said, it recorded the expense that covers periods from 2022 through September 2025.

Without that expense, according to Neumann, Netflix would've beaten its third-quarter targets for operating income and operating margin. "We don't expect this matter to have a material impact on our results going forward," he said, according to a transcript provided by AlphaSense.

Netflix's reported operating income of $3.24 billion missed consensus expectations for $3.6 billion, per analysts tracked by VisibleAlpha.

That reassurance didn't keep investors from selling today. William Blair analyst Ralph Schackart attributed Netflix's swoon to the optics of the miss, saying a strong slate of content this past quarter built up investor expectations. Wedbush's Alicia Reese said the numbers underwhelmed against a phenomenal content slate."

"With such a strong content slate this quarter, investors were likely playing for a beat and a stronger guide above the Street versus basically an in-line quarter and guide," Schackart wrote.

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