Level 1 — Absolute Beginner
Netflix is a company that shows movies and TV shows online. Its stock price fell a lot on Friday.
The stock dropped about 11 percent. That means it lost a big part of its value in one day.
Netflix said its next few months might not make as much money as people hoped.
Other tech companies, like chip makers, also saw their stock prices fall. Many stock markets went down together.
- stock
- A small piece of ownership in a company that people can buy or sell
- plunge
- To fall suddenly and quickly
- streaming
- Watching video or listening to audio online instead of downloading it
- guidance
- A company's own prediction about its future results
- chip maker
- A company that builds computer chips
- market
- A place, often online, where stocks are bought and sold
- value
- How much something is worth
- forecast
- A prediction about what will happen in the future
Level 2 — Elementary
Netflix shares fell as much as 11% on Friday after the streaming company gave investors a weaker-than-expected forecast for its next quarter.
Netflix had actually beaten Wall Street's profit estimate for the quarter that just ended, but its guidance for the next three months, both revenue and earnings, came in below what analysts expected.
The company forecast third-quarter revenue of about $12.86 billion, compared with analyst expectations closer to $13 billion, and earnings per share of $0.82, below the expected $0.84.
Netflix's disappointing outlook added to a rough day for technology stocks, as a deepening selloff in semiconductor, or chip, companies pulled down the Nasdaq Composite and the broader S&P 500 index at the opening bell.
- investor
- A person or company that puts money into stocks hoping to profit
- quarter (financial)
- A three-month period used for company reporting
- revenue
- The total money a company brings in from sales
- earnings per share
- A company's profit divided by its number of stock shares
- analyst
- An expert who studies companies and predicts their performance
- outlook
- A company's expectation for its own future performance
- semiconductor
- A material used to make computer chips
- opening bell
- The official start of trading on a stock exchange
Level 3 — Intermediate
Netflix shares slid as much as 11% in Friday trading after the streaming giant paired a narrow beat on its just-completed quarter with third-quarter guidance that fell short of Wall Street's expectations on both the top and bottom lines.
The company guided third-quarter revenue to roughly $12.86 billion, versus consensus estimates near $13 billion, and earnings per share to $0.82, against an expected $0.84, a gap small in absolute terms but large enough to unsettle investors already wary of decelerating growth in the streaming business.
Some analysts framed the reaction as evidence that Netflix is losing what one described as 'narrative control,' the sense that the company's own story about sustained subscriber and advertising growth is no longer fully persuading the market.
The disappointing outlook landed amid an already deteriorating session for technology stocks, as a sharpening selloff in semiconductor shares dragged the Nasdaq Composite down roughly 1.8% and the S&P 500 down more than 1% at the opening bell, with investors increasingly reassessing whether the scale of AI-related capital spending across the sector remains sustainable.
- top and bottom lines
- A company's revenue (top line) and profit (bottom line)
- consensus estimate
- The average prediction among financial analysts
- unsettle
- To make someone feel worried or uneasy
- decelerate
- To slow down
- narrative control
- A company's ability to shape how investors understand its story and prospects
- session (trading)
- A single day's period of stock market trading
- capital spending
- Money a company invests in long-term assets like equipment or infrastructure
- sustainable (financially)
- Able to continue at the same level without causing problems
Level 4 — Advanced
Netflix shares tumbled as much as 11% in Friday trading after the streaming giant's narrow beat on its just-completed quarter was overshadowed by third-quarter guidance that fell short of Wall Street's expectations on both revenue and profitability.
The company guided third-quarter revenue to approximately $12.86 billion against consensus estimates near $13 billion, and earnings per share to $0.82 versus an expected $0.84, a shortfall modest in raw magnitude yet sufficient to unsettle a market already primed to scrutinize any sign of decelerating momentum in the company's subscriber and advertising businesses.
That reaction prompted several analysts to characterize the episode as evidence that Netflix is forfeiting what one commentary termed its 'narrative control,' a suggestion that the company's long-cultivated story of durable, compounding growth is losing its persuasive grip on investor sentiment.
The disappointing outlook compounded an already deteriorating session for technology equities more broadly, as an intensifying selloff in semiconductor shares dragged the Nasdaq Composite down roughly 1.8% and the S&P 500 down over 1% at the opening bell, underscoring a wider recalibration in which investors are increasingly interrogating whether the scale of capital expenditure underpinning the artificial intelligence boom can be sustained.
- overshadow
- To make something seem less important by comparison
- profitability
- The degree to which a business generates profit
- shortfall
- The amount by which something falls short of expectations
- primed (to react)
- Prepared or ready to respond in a particular way
- forfeit
- To lose or give up something as a result of an action or failure
- cultivate (a narrative)
- To develop or promote something carefully over time
- recalibration
- A significant adjustment in how something is assessed or valued
- interrogate (figurative)
- To examine or question something closely and critically
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