Yesterday, Netflix‘s quarterly revenue fell short of analysts’ estimates, leading to a 9 percent drop in shares during after-hours trading. The addition of 5.9 million new streaming customers from April to June and better-than-expected earnings were overshadowed by the disappointing revenue figure and a weaker forecast for the third quarter.

The company’s diluted earnings-per-share for the second quarter were $3.29, surpassing the consensus forecast of $2.86. Netflix exceeded expectations with nearly 6 million new subscribers, bringing the total global subscriber count to 238.4 million by the end of June, Reuters reported.

Quarterly revenue increased by 2.7 percent compared to the previous year, reaching $8.2 billion, slightly lower than the $8.3 billion forecasted by analysts. The company anticipated third-quarter revenue to reach $8.5 billion, but Wall Street had predicted $8.7 billion.

Analyst Craig Huber from Huber Research Partners suggested that some investors may have been too optimistic about Netflix’s advertising tier and the impact of password crackdowns, leading to an overestimation of third-quarter performance.

Although subscriber numbers grew, average revenue per member dropped by 3 percent due to many new sign-ups coming from countries with lower-priced subscriptions.

Despite the challenges, Netflix remains positive about its advertising tier, indicating that it will continue to play a small role in its membership base. Chief Financial Officer Spencer Neumann expressed that it would take time to reach substantial ad revenue, even aiming for 10 percent of total revenue.

The recent slide in share value was partly attributed to investors selling to realize profits. Netflix’s stock had seen a 62 percent increase over the year, with an additional 8 percent growth in the past month.

Similar to other companies in the industry, Netflix faced difficulties due to strikes involving tens of thousands of Hollywood actors and writers. Despite production challenges, Netflix’s global presence has given it an advantage during this period.

To address the impact of the strikes on its content, Netflix raised its 2023 free cash flow estimate to $5 billion, up from the initial $3.5 billion, as it expects to spend less on content during the shutdown of productions.

Co-CEO Ted Sarandos, who grew up in a union household, expressed hopes for a resolution to the labor tensions, stating that the strike was not an outcome that Netflix desired.