Sure, Netflix Stock Took a Tumble Last Week. Here's Why I'm Still Bullish on the Company

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like better than Netflix ›Streaming giant Netflix (NASDAQ: NFLX) took quite a tumble after its recent third-quarter 2025 earnings report.The primary culprit? The company whiffed badly on its profit margins, coming in at an operating margin of 28%, well below its previously communicated 31.5% guidance. The stock had already gained 60% over the past year before earnings, so the sell-off on such a jarring miss probably shouldn't surprise anyone.Of course, the more important question now is what investors should do next.Nobody likes to see a top growth stock like Netflix tumble, but here is why I remain bullish on the company moving forward. Pick any stock, and you'll see its share price go up and down numerous times over the years. Oftentimes, the key to navigating volatility is to understand the difference between noise and signal and differentiate between the two.You could think of noise as low-impact events, or temporary setbacks that don't reflect on a company's long-term prospects. On the other hand, signals are meaningful developments that are important enough to alter how you view a company moving forward.So, why did Netflix's operating margin fall so short of its own expectations?Management explained in its third-quarter shareholder letter that it took a one-time $619 million tax expense, resulting from a dispute with Brazilian tax authorities that it hadn't factored into previous forecasts. The two most crucial takeaways here are:Absent the charge, Netflix's operating margin would have exceeded guidance.The company doesn't foresee any additional impact on its business from this matter.Sure, it stinks that Netflix had to take that financial hit, but the driving point here is that it's a one-time thing. Since it doesn't have anything to do with Netflix's ability to attract and retain streaming users, it seems more like noise than something worth worrying much over.On the contrary, Netflix can continue growing as arguably the world's leading streaming service.Focusing on the long term allows an investor to zoom out and focus on the things that genuinely matter most to a company's success 10 years from now. In Netflix's case, there are several levers it can pull to continue expanding and monetizing its subscriber base.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,840.20 +17.86 (+0.26%)Dow 3047,562.87 +40.75 (+0.09%)Nasdaq23,724.96 +143.81 (+0.61%)Russell 20002,479.38 +13.43 (+0.54%)VIX17.44 +0.53 (+3.13%)Gold3,996.50 -19.40 (-0.48%)PortfolioSign in to access your portfolioSign inTop gainersBHF Brighthouse Financial, Inc. 57.07 +11.38 (+24.91%)ILMN Illumina, Inc. 123.54 +24.53 (+24.78%)TWLO Twilio Inc. 134.88 +22.02 (+19.51%)TVTX Travere Therapeutics, Inc. 35.16 +5.51 (+18.58%)BFAM Bright Horizons Family Solutions Inc. 109.23 +16.95 (+18.37%)Top losersATGE Adtalem Global Education Inc. 98.02 -43.75 (-30.86%)SPSC SPS Commerce, Inc. 82.24 -21.65 (-20.84%)TBBK The Bancorp, Inc. 65.37 -11.83 (-15.32%)DXCM DexCom, Inc. 58.22 -9.98 (-14.63%)ABR Arbor Realty Trust, Inc. 10.09 -1.46 (-12.64%)Most activeNVDA NVIDIA Corporation 202.49 -0.32 (-0.16%)AMZN Amazon.com, Inc. 244.22 +21.36 (+9.58%)PFE Pfizer Inc. 24.65 +0.36 (+1.48%)OPEN Opendoor Technologies Inc. 7.77 +0.43 (+5.86%)ONDS Ondas Holdings Inc. 6.44 +0.15 (+2.38%)Earnings eventsMy earnings eventsEarnings eventsTrending tickersBTC-USD Bitcoin USD 110,373.64 +421.62 (+0.38%)ETH-USD Ethereum USD 3,855.70 -17.82 (-0.46%)XRP-USD XRP USD 2.52 +0.01 (+0.44%)BRK-B Berkshire Hathaway Inc. 477.54 -0.98 (-0.20%)SOL-USD Solana USD 185.23 -0.39 (-0.21%)Top economic events