Netflix shares drop 10% after Brazil tax settlement

Netflix stock tumbled 10.1% on Wednesday — its steepest decline since 2022 — after the streaming giant reported Q3 earnings that fell short of analysts’ expectations. The main reason: a USD 619 million payment to settle a tax dispute in Brazil following an August ruling by the country’s Supreme Court.

The court upheld legislation expanding the scope of a federal levy known as CIDE, originally imposed on technology transfer contracts involving foreign companies. Netflix said the payment, which dates back to 2022 and had been disclosed in previous filings, “will not have a material impact on future results.”

While Netflix was not part of the original case, the decision established a precedent allowing the so-called CIDE-Royalties tax to apply to cross-border payments that do not directly involve technology transfer — including royalty payments for administrative and technical services and trademark licensing.