Netflix earned more than expected, but its stock still fell

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Netflix reported its results after the market closed on Tuesday. It earned 87 cents a share, more than the 82 cents Wall Street expected, and revenue of $12.87 billion matched forecasts. But its stock fell about 5% in after-hours trading. The reason: Netflix said it expects $13.44 billion in revenue over the holiday quarter, a bit less than the $13.51 billion analysts were hoping for.

During the regular trading day, the Dow jumped about 530 points, or 1%, and smaller companies did even better. Oil prices cooled off after a morning spike, which helped stocks recover early losses. Big tech names like Apple and Meta slipped. Tesla and Meta report their own results after the close on Wednesday.

Why it matters: If you watch Netflix, you're part of the forecast. Investors care less about what a company just earned than about what it will earn next, and that depends on whether people like you keep paying, upgrade or put up with ads. A tiny miss on the future can matter more than a beat on the past.

Your money: What a 7% mortgage rate really costs

A mortgage is a loan to buy a home, usually paid back over 30 years. The average 30-year mortgage rate is about 7.4%, according to Freddie Mac, up from about 6.3% a year ago. New data on Tuesday showed pending home sales, which count signed contracts to buy homes, fell to a record low in September.

Here's why one percentage point matters so much. Borrow $300,000 for 30 years at 7.4%, and you pay about $2,077 a month. At 6.4%, it's about $1,877. That's roughly $200 a month, or more than $70,000 over the life of the loan.

The lesson works for any loan, from a car to a credit card: small rate differences add up when you borrow a lot or borrow for a long time. That's why your credit score matters. A better score usually gets you a lower rate.

Words to know

Write what each word means in your own words.

mortgage
guidance

Questions

The story

In one sentence, what happened in the top story?
How could this news affect you or your family? Be specific.

Your turn

In your own words, what's the main idea of “What a 7% mortgage rate really costs”?

Quiz

A family borrows $300,000 for 30 years. If their mortgage rate is 6.4% instead of 7.4%, about how much less do they pay each month? Circle one.
1. About $20
2. About $200
3. About $2,000
4. Nothing, the loan amount is the same

What do you think?

Netflix makes money from subscriptions and from ads. Would you rather pay more for no ads or pay less and watch ads? What would make you cancel? Answer in two or three sentences, and give a reason.

Answer key

Words to know

mortgage: A loan to buy a home, usually paid back over 15 or 30 years.
guidance: A company's forecast of its future sales or profits. Stocks often move more on guidance than on past results.

Questions

Answers will vary: a clear one-sentence summary of the top story.
Answers will vary. Look for a specific reason tied to the story.
Answers will vary. Look for the lesson's main idea in the student's own words.
B. About $200. The monthly payment drops from about $2,077 to about $1,877, a difference of roughly $200. The amount borrowed is the same, but the interest rate changes how much you pay to borrow it.
Answers will vary. Look for a clear opinion backed by a reason.

Optional: tomorrow's bell-ringer, before first period

Tomorrow's bell-ringer in your inbox before first period: a five-minute money-news briefing with class slides, a quiz and a worksheet like this one. Free. You don't need it to use any worksheet.