Copyright International Business Times
Controversy erupted recently when Netflix announced its third quarter results as the streaming giant found itself in troubled waters. Its revenue of approximately USD$11.51 billion (£8.98 billion) fell just shy of expectations, and the company's earnings per share of US$5.87 (£4.58) missed the expected mark as well. As a result, Netflix shares tumbled nearly 7% in trading. But other than the financial stumble, an unexpected name entered the discussion here: Elon Musk. This is because some people on social media speculated that his outspoken campaign against Netflix's content and subscription base may have played a role in the stock's drop recently. Does that theory really hold up when it comes to direct causation? The timing and the noise around his public calls to 'Cancel Netflix' raise the worry about the interplay between culture commentary and investor sentiment in the markets. What Went Wrong for Netflix Stock? Despite the alleged Musk theory, Netflix's financial setback this quarter actually stemmed from a convergence of factors. Firstly, the revenue figure of US$11.51 billion came in just under the estimated US$11.52 billion to US$11.53 billion, showing that the company edged only ever so slightly past its own forecast but indeed did not meet market expectations. Furthermore, although earnings per share improved year on year from US$5.40 to US$5.87, the fact that it did not reach the anticipated US$6.94 (£5.41) weighed heavily on investor sentiment as per some reports. Adding to that and compounding the disappointment was a legal tax charge related to the company's Brazilian operations, which reportedly hit the operating margin. Netflix disclosed as per reports that a one time expense in this case due to a tax dispute in Brazil, reduced its operating margin to 28 percent versus an estimated forecast of 31.5 percent. While Netflix's CFO noted that this does not say anything about the company's long term future as he said, 'It's not a tax that's specific to Netflix. It's not even specific to streaming,' he added, 'Absent this expense, we would have exceeded our Q325 operating income and operating margin forecast, and we don't expect this matter to have a have a material impact on our results going.' Is Elon Musk Really to Blame for Netflix's Stock Fall? While this was clearly an internal financial causation within Netflix, into this mix one name has entered, which is Elon Musk. The reason it seems some people are linking his name to Netflix's stock drop is because of Musk calling on his large audience to cancel their Netflix subscriptions allegedly in response to content he described as unsuitable for children. This all started in early October 2025, when Musk reportedly reposted a tweet talking about the Netflix show Dead End: Paranormal Park, in which a character coming out as transgender led to his response that 'This is not ok'. And this was followed by multiple responses by him to follow on the same topic about Netflix as he tweeted 'Cancel Netflix for the health of your kids' Now given his influence, it is plausible that some of his followers responded by either cancelling or not renewing subscriptions. However, equating those actions with a nearly 7 percent plunge in Netflix's stock value oversimplifies matters here. Because the fact remains that the stock drop followed clear financial causations that include the earnings & margin miss, the Brazil tax charge, and investor concern about growth margins. So while Musk's campaign may have allegedly influenced public narrative and may even have had a marginal impact on Netflix viewership or perception amongst some viewers, the cold fact is that there is no publicly documented data proving his campaign alone caused the earnings miss or the share price decline. Therefore, in the end, Netflix's earnings miss was rooted in concrete numbers which is a combination of missed forecasts, margin pressure and a tax charge. And Elon Musk's involvement adds a twist of public relations intrigue and may contribute to perception risk, but it stops short of being a demonstrable cause of the financial result.
