Netflix (NASDAQ:NFLX) shares dropped around 9% in pre-market trading on Friday after the streaming company issued third-quarter revenue and earnings guidance that came in below Wall Street forecasts, prompting renewed concerns about its near-term growth outlook.
Third-quarter guidance falls short of expectations
Netflix expects third-quarter earnings of $0.82 per share, below the analyst consensus of $0.84. The company also projected revenue of $12.86 billion, missing market expectations of $13.0 billion.
“The quarter was a win for the bears, while the price of NFLX discounts multi-year deceleration,” Wolfe Research analyst Peter Supino said in a note.
The company also announced that it will publish its viewing-hours report once a year instead of twice annually beginning in January 2027. The move is intended to direct greater investor attention toward financial performance, particularly revenue growth and operating profit. Netflix stopped reporting quarterly subscriber figures in 2025.
Stock under pressure despite long-term optimism
Netflix shares have declined more than 40% over the past 12 months as investors reassessed the company’s long-term growth prospects.
Sentiment weakened further after Netflix explored acquiring Warner Bros. Discovery’s studio and streaming assets but ultimately failed to complete the transaction.
“We do not believe the current valuation adequately captures Netflix’s mid/long-term potential,” Bernstein analyst Laurent Yoon defended the company following the post-earnings selloff.
Competition across the streaming industry also remains intense, with traditional entertainment companies such as Disney and digital platforms including YouTube and TikTok continuing to compete aggressively for audiences and advertising spending.
Eric Clark, portfolio manager of the LOGO ETF and CIO at Accuvest Global Advisors, remained optimistic.
“I think it’s more important to focus on what happens when we get into the fall and engagement starts to rise again. We know they’re comfortable with ad revenue continuing to grow, and it’s a high-margin business with strong free cash flow generation and margins that are still gradually improving, so I’m not worried about a dime here or five cents there,” Clark said.
Quarterly results deliver mixed picture
Netflix reported adjusted earnings per share of $0.80 for the second quarter, narrowly exceeding analysts’ expectations of $0.79.
Revenue increased 13% year over year to $12.56 billion but came in slightly below the consensus forecast of $12.58 billion.
The company attributed quarterly growth to recent subscription price increases and continued expansion of its advertising-supported offering.
Netflix also reported improving user engagement, with subscribers watching more than 97 billion hours of content during the first half of 2026. That represented a 1.5% increase from the second half of 2025 and a 1.9% improvement compared with the first half of last year.
“Our financial performance remains solid and we’re on track to meet our objectives for the year,” Netflix said in its quarterly letter to shareholders.
Clark also argued that recent market trends continue to support the investment case.
“Every quarter is going to have some noise, but I don’t think anything has changed with the underlying story. In many ways, this was a stock that sat outside the tech and AI themes, and investors had been discarding anything that wasn’t tied to those areas until the last couple of weeks. Now, this utility trading at 21 times earnings looks attractive as a stable, predictable business with strong free cash flow and a significant buyback program,” Clark added.
Netflix stock price
