Shares of Netflix (NFLX) fell 5% after the streaming giant lowered its guidance for the current third quarter of the year.
Netflix Chief Financial Officer (CFO) Spencer Neumann lowered the guidance on the company’s operating margins and warned investors that its new advertising business was not yet material to overall revenue.
Netflix is now forecasting operating margins in the 18% to 20% range, below the current consensus estimate of 22% among analysts who track the company’s progress.
Neumann, who was speaking at a conference in New York City, added that the ongoing strike by Hollywood writers and actors is starting to impact Netflix’s business.
Neumann added that while Netflix continues to develop video games and lifestyle sports programming for its streaming platform, the company has no plans to spend billions of dollars acquiring the rights to live sporting events.
Despite the current pullback, the stock of Netflix has increased 84% over the last 12 months and currently trades at $412.24 U.S. per share.