Netflix‘s highly anticipated third-quarter earnings report is in, but what does it mean? In co-CEO Ted Sarandos’ telling, it’s all about execution. And how is Wall Street reacting to management commentary about the streaming giant’s outlook and largest layoffs in years, including the exit of film head Dan Lin and the replacement of chief content officer Bela Bajaria with Peter Rice?
Sarandos discussed content strategy, with co-CEO Greg Peters addressing a 2026 shortfall in advertising revenue. But the key quote from the call may have been Sarandos’ blunt note about staying the course.
“There is no need for a fundamental shift in the strategy,” he said. “We do need better execution in the U.S.” adding: “It’s just not growing as fast as it could or as fast as we’d like. So we had some really solid doubles and triples this year, but the other territories count on some of those titles being home runs so that they’ll travel around the world.”
In Wednesday pre-market trading, Netflix’s stock was down more than 6 percent at $64.35, signaling a new 52-week low. As of Tuesday’s market close, that low had been at $65.08.
So, what can investors take away from the streamer’s updates? Below, The Hollywood Reporter has compiled analysts’ reactions to Netflix’s latest set of results and outlook.
Analyst: Mark Mahaney, Evercore ISI
Stock rating and price target: outperform, $90, down from $110
Takeaways: “Is A Better Script Coming?” was the key question that the analyst posed in the headline of his report. “For the third quarter in a row, Netflix shares traded off mid-single-digit to high-single-digit percentages in the aftermarket on soft earnings per share results. And this is now the fourth quarter in a row that Netflix guidance has come in lighter on at least one metric. Growth has clearly slowed at Netflix.”
Mahaney reduced his financial estimates and pointed out slowed revenue growth, wondering: “What’s Going Wrong And Is There A Fix?” He then put forward some reasons: “We attribute this to some market maturity, consistent competition from large platforms like YouTube, Amazon, Disney, etc. … potentially a structural challenge from short-form content platforms (TikTok, YouTube again), and content mis-execution (i.e. no major global hits since KPop Demon Hunters).”
What to do? “We believe most of these challenges are addressable, and we view Netflix management as highly capable,” the analyst offered. “By bringing in a new chief content officer, Netflix is at least acknowledging and acting on the challenge. We also believe that Netflix, the global hit machine, will likely have a hit in 2027.”
And Mahaney shared an upbeat conclusion. “This along with an improvement in content delivery and some key live events (Women’s World Cup) may well drive growth again in U.S. viewing hours, changing the engagement narrative. We also see live events and the expansion of the ad-supported plan to 15 new markets in 2027 as potentially accelerating sub ads growth,” he wrote. All in all, “we believe the Netflix long thesis is still intact. Or at least, we are more confident than the market is that it is intact.”
Analyst: Brian Pitz, BMO Capital Markets
Stock rating and price target: outperform, $125
Takeaways: “Advertising faces product delays, but [the] long-term vision [is] still intact,” was the analyst’s post-earnings takeaway, with results leading him to “fine-tune” his financial estimates.
Despite ad momentum running behind expectations, the analyst continues to see advertising as a key growth opportunity for Netflix. “We remain positive on the long-term monetization opportunity and see the near-term advertising slowdown as buildout pain rather than a structural growth challenge,” he wrote.
Content and subscriber momentum are a mixed bag. “Encouragingly, membership growth remains solid, supported by healthy subscriber retention across regions as churn improved year-over-year,” the analyst noted. “We were encouraged that Netflix’s industry-leading churn improved year-over-year globally and in the U.S., better than management expected. However, management acknowledged that U.S. content execution needs improvement, and the incoming chief content officer Peter Rice will focus on it.”
Pitz also addressed the role sports could play in the content strategy. “While Netflix is unlikely to buy expensive season-long premium sports rights, it continues to lean into specific live inventory, adding its first NFL Thanksgiving Eve game,” he said. “Live content accounts for only 1 percent of engagement hours despite representing 5 percent of content spend, but it remains an important lever for improving subscriber acquisition and retention and reducing churn.”
Analyst: Michael Morris, Guggenheim
Stock rating and price target: buy, $78, down from $80
Takeaways: To explain his stock price target reduction, Morris cited “third-quarter results that met guidance but were paired with an outlook modestly short of expectations,” which led him to lower his 2027 revenue estimate to $56.8 billion from $57.1 billion, with his earnings per share forecast down by 9 cents to $3.80.
With Netflix cutting its 2026 advertising revenue target to around $2.7 billion from $3.0 billion also made Morris pare back his 2027 ad estimate to $4.0 billion, which he said compares to a $5.2 billion consensus expectation.
Of course, the recent content leadership changes and what it means for its programming strategy also featured in his report. “Co-CEO Ted Sarandos described the company’s strategy as ‘unchanged’ while acknowledging ‘we could do better,'” he wrote. “Peter Rice’s mandate as chief content officer is to find more home runs across formats and genres and strengthen talent relationships. Returning franchises including Emily in Paris, The Diplomat and Wednesday, and feature films including Narnia, provide a bridge to a lineup developed under Mr. Rice, and we consider a more impactful slate non-negotiable for renewed investor interest.”
He also called content licensing “a silver lining” in content, citing a recent deal with Disney. Concluded Morris: “Netflix is a top platform for licensed product, and in our view more win-win partnerships with underexposed content at attractive terms would be incremental. Bundling with most other major streamers or launching a free service in the U.S. would not sustainably bolster top-line growth.”
Analyst: Ralph Schackart, William Blair
Stock rating and price target: outperform, no price target
Takeaways: The engagement and content debates featured heavily in Schackart’s report. “The company acknowledged the need to accelerate view-hours growth, highlighting India as an example of successful execution, where view hours increased 24 year-over-year and view hours per member grew in the low- to mid-single digits,” he highlighted.
The analyst also weighed in on Rice’s content chief appointment. “Management views the transition as an opportunity to improve content execution, particularly in the United States,” he wrote. “Management stressed that the change does not represent a shift in content strategy, but rather an opportunity to take the slate to the next level.”
Schackart summarized his takeaways from the results and outlook this way: “Unfortunately, this quarter did not give the bears a reason to pull back on their growth concerns.”
What does this mean for investors? “While it may take patience, we believe investors should benefit from accumulating shares on the pullback, recognizing that there is not a near-term catalyst. We believe the company will solve its near-term content concern at some point in 2027.”
Analyst: Laurent Yoon, Bernstein
Stock rating and price target: outperform, $80, down from $95
Takeaways: Patience was a recurring theme in Yoon’s report, which is entitled “When Success Starts Looking Mature.” “New content boss, new content strategy?” it asked. “Perhaps, but not anytime soon,” it offered. “Despite new leadership with deep experience across TV, film, and streaming, the messaging remains firmly centered on traditional content, live events, and licensing. Any meaningful strategic shift – if there’s one – could take years, not quarters, to show up in the slate or the numbers.”
That may also keep weighing on investor sentiment. “Investors will increasingly focus on the durability of ‘double-digit’ growth and the pace of margin expansion as content investment comes back into focus,” the analyst explained. “The risk is not the near-term fundamentals, but perception. A strategy that continues to lean on traditional content, traditional formats, and traditional engagement risks reminding both consumers and investors of the ‘L’ word – legacy. That alone may be enough to keep the stock range-bound near term, even if the underlying business continues to execute well.”
Advertising may not be broken, but also made for a disappointment. “Management discussed slower ad product rollouts rather than demand, suggesting a delay rather than disruption, but it still represents a missed opportunity,” the analyst concluded.
All in all, he reduced its forecasts for Netflix, which also pushed down the stock price target. “Changes in earnings per share estimates are due to slower-than-expected advertising revenue growth, domestic subscriber growth and margin expansion slightly offset by accelerated buybacks,” Yoon noted. “We also reduced our valuation multiple to 20 times (from 25 times) to reflect slower growth and ongoing negative investor sentiment without a near-term positive catalyst.”
Analyst: Rob Fishman, MoffettNathanson
Stock rating and price target: buy, $90, down from $100
Takeaways: MoffettNathanson was among the firms cutting their financial forecasts and Netflix stock price target, in this case by $10, following the latest results and management commentary.
Fishman wondered about the outlook for revenue growth, especially given the ad revenue updates, and the outlook for content spending following the recent executive changes.
“If revenue is slowing, does Netflix need to reaccelerate content spend?” the analyst asked. And he shared that underlying his forecast is 8 percent content spending growth as “management is clearly focused on reining in expenses to invest in high-impact areas, as evidenced by the recent headcount reductions.”
His conclusion is that Netflix can continue to improve the monetization of its reach and scale to grow profits in the future. Wrote Fishman: “After the sell-off, we believe Netflix’s downside is limited, and the stock presents an attractive entry point to capture upside in leveraging the company’s global scale to drive incremental growth above the strength of its core business model.”