Netflix (NASDAQ:NFLX) shares fell more than 5% in pre-market trading after the streaming company issued fourth-quarter revenue guidance below Wall Street expectations, despite reporting third-quarter earnings above analysts’ forecasts.
The company also reduced its annual advertising revenue outlook, citing delays in the introduction of certain advertising products.
The share price decline followed a period of underperformance relative to the broader US stock market. Netflix shares had fallen more than 26% since the beginning of 2026, compared with a 12.7% increase in the S&P 500.
Since its previous quarterly earnings announcement in July, the stock had declined approximately 0.4%.
Netflix reported third-quarter earnings per share of $0.87, exceeding the analyst consensus estimate of $0.82.
Quarterly revenue reached $12.87 billion, matching Wall Street expectations.
Although the company exceeded earnings forecasts, its outlook for the final quarter of the year fell short of market estimates.
For the fourth quarter, Netflix projected revenue of $13.4 billion, compared with analysts’ expectations of $13.51 billion.
The company also forecast full-year 2026 revenue of $51.1 billion, within its previous guidance range of $51 billion to $51.4 billion.
The updated figures indicated that Netflix expected annual revenue to remain within its established forecast range, although fourth-quarter sales were projected to be lower than analysts had anticipated.
Netflix reduced its expected advertising revenue for 2026 to approximately $2.7 billion, compared with its previous projection of around $3 billion.
The company attributed the revision to a slower-than-anticipated introduction of certain advertising product capabilities.
In its shareholder letter, Netflix said:
“While subscription revenue growth has outperformed our expectations, we currently expect 2026 ad revenue of ~$2.7 billion [versus] approximately $3 billion previously (due to slightly slower than expected rollout of some ad product capabilities).”
The revised outlook represents a reduction of approximately $300 million from the company’s earlier advertising revenue forecast.
The announcement highlighted differing trends between Netflix’s subscription business, which performed above internal expectations, and its advertising operations, where product development delays affected projected revenue.
Netflix has been investing in additional programming and content formats as it seeks to maintain and increase the amount of time subscribers spend using its platform.
The company has expanded beyond traditional on-demand films and television programmes to include live entertainment, sporting events, video podcasts and content produced by YouTube creators.
It has also pursued subscription bundling arrangements with other streaming services and secured broadcasting rights for the 2030 FIFA World Cup.
These initiatives form part of Netflix’s efforts to broaden its entertainment offering and attract viewers across different content categories.
However, external indicators of audience engagement have presented a mixed picture.
Goldman Sachs recently noted that third-party data covering Netflix’s engagement trends during the summer and early autumn had been “quite mixed”.
Citing figures from Sensor Tower, the investment bank highlighted a 10% year-on-year decline in monthly active users in the United States during the third quarter, compared with a 1% decrease across the rest of the world.
These figures represent third-party estimates rather than Netflix’s own reported subscriber data.
Netflix has progressively reduced the frequency of certain disclosures relating to subscriber numbers and viewing activity.
The company stopped publishing quarterly subscriber figures in 2025.
In July 2026, Netflix announced that it would also reduce the frequency of its viewing-hours reports.
Beginning in January 2027, the company plans to publish viewing-hours data annually rather than twice a year.
The changes mean investors will have fewer regularly published company figures with which to assess audience growth and engagement.
Third-party measurements may therefore remain relevant to analysts evaluating trends in Netflix’s user activity, although methodologies can differ from the company’s internal measurements.
Netflix has experienced several senior management changes alongside a restructuring of its workforce.
Chief Content Officer Bela Bajaria was replaced by Peter Rice, a media executive who previously held senior positions at Fox and Disney.
The company also saw the departure of Dan Lin, who had led its film division for nearly three years.
Both executive changes occurred within the same week.
Separately, Netflix announced plans to eliminate approximately 1,000 positions, equivalent to around 6% of its global workforce.
The reductions represent the company’s largest round of layoffs since 2022.
The management changes and workforce reductions come as Netflix continues investing in programming and adjusting its operations.
Netflix has indicated that it intends to continue expanding its programming through licensing agreements and partnerships with external content providers.
In its shareholder letter, the company said:
“We’ll continue to expand our entertainment offering through licensing and new ways to bring in more third-party content to our service, like our TF1 partnership in France. Our audience, which is approaching one billion people, and our best-in-class product capabilities, make us great partners for studios, networks and creative talent.”
The company cited its partnership with French broadcaster TF1 as an example of its approach to incorporating additional third-party programming.
Netflix’s strategy also includes live events, sports and other content formats intended to complement its existing film and television catalogue.
Investors will be assessing whether Netflix can meet its fourth-quarter revenue forecast of $13.4 billion and its full-year target of $51.1 billion.
Advertising revenue will remain an area of attention following the reduction in the company’s 2026 forecast to approximately $2.7 billion.
Audience engagement trends, programming expenditure and the impact of recent management and workforce changes will also be relevant to assessments of the company’s performance.
Although third-quarter earnings exceeded analysts’ expectations, the lower-than-anticipated fourth-quarter revenue guidance and revised advertising outlook contributed to the negative initial market reaction.
Netflix stock price
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