Netflix stocks closed 2% lower on Thursday after falling 5% the previous day. This comes after comments from CFO Spencer Neumann at Bank of America’s Media, Communications, and Entertainment Conference that touched on the company’s lower-than-expected outlook on its operating margins.
After speaking on numerous facets of the business, Neumann explained that he expects operating margins to be in the range of 18% to 20%; down from a peak of 21%. Current consensus estimates are slightly below 20%.
The CFO added that while new revenue initiatives such as the ad-supported tier have been introduced, such offerings could take time to mature. “We’re still in the crawl of the crawl-walk-run stage, so it is not easy to build an ad business from scratch. We got a lot of work to do,” Neumann explained.