Netflix’s flurry of C-suite changes (Peter Rice in, Bela Bajaria and others out) along with its deepest round of layoffs since 2022 are setting the company on a new path – but to where?
That’s the question Wall Street is asking as the company preps its latest quarterly earnings and investor call set for after Tuesday’s stock market close.
Investors “need, in short order, some indications toward confidence in the growth trajectory that this powerful, global platform should be able to provide,” said David Joyce of Seaport Research Partners. He and others suggest more live sports, a laser focus on advertising, expanded third-party partnerships, continued experimentation with theatrical releasing, and perhaps another stab at M&A once NBCUniversal is spun out.
The Street is eager for insights around viewer engagement and the upcoming original content slate, both Achilles’ heels of late. Coming on the heels of the Skydance merger close, which established Netflix as the bridesmaid in the pursuit of Warner Bros., this will be the giant streamer’s most consequential earnings report in years. Its stock, in part due to the questions prompted by the Warner chase, has been slumping, with shares down 25% year to date and over 40% over the past 12 months.
The roughly 1,000 job cuts, or 6% of staff, reached to the heights of the org chart. Film head Dan Lin was unexpectedly ousted earlier Monday, on the heels of his lieutenant Doug Belgrad and content chief Bajaria, a 10-year veteran. She was replaced by former Disney and Fox executive Peter Rice as Netflix co-CEOs Ted Sarandos and Greg Peters are “structuring the narrative for the earnings call and beyond,” Joyce observed.
Analysts are eyeing revenue of $12.8 billion for the three months ended September 30, up 11.8% from the year-earlier quarter, with earnings per share of 82 cents vs. 59 cents. But the numbers – assuming they’re in line with expectations – may be less critical than commentary by Sarandos and Peters. The former was particularly candid at a recent Bloomberg conference, saying viewership was not growing as much as he would like.
Investors (and Hollywood players) were taken aback by the company’s Warner bid, and have also noted that the summer did not see a seasonal rebound in engagement. Record-breaking FIFA World Cup telecasts ate into the overall market, but even so, “fewer Netflix titles are capturing the highest levels of streaming engagement” as competition for time and attention continues to intensify, Matthew Condon of Citizens wrote in a client note. With the layoffs, he added, “we believe the company is strategically realigning spend behind its highest priority initiatives as it looks to improve engagement and revenue growth.”
He has a “market perform” rating on the stock (essentially a hold) “as we await a more definitive set of catalysts that we believe are capable of driving sustained upward estimate revisions.”
Joyce said in a recent report that the shares are so low he recommends a “buy” but did lower his price target to $90 from $102. The stock is “in somewhat of a ‘show-me’, wait-and-see period.”
TD Cowen’s John Blackledge also has a “buy” on the streamer with a $100 price target. He thinks Netflix will be able to lift engagement and drive member growth and retention with “emerging engagement vectors” from live sports to podcasts. “We expect solid 3Q26 results and believe NFLX can sustain its intermediate-term financial objectives, incl. healthy top-line growth, margin expansion and rising FCF [free cash flow].”
M&A is now on the table, certainly after the pursuit of Paramount upended more than a quarter century of aversion to major acquisitions for Netflix, which now ranks sixth in U.S. TV usage, pro forma for the Skydance and pending Fox-Roku mergers, says Joyce. A significant leapfrog in market share could come from an acquisition of NBCUniversal, which will be spun out from Comcast next year, taking the streamer from 7.8% to 14.9%.
Rice, now chief content officer at Netflix, “has a significant skill set in managing sports and entertainment programming for both 20th Century Fox and Disney, after the latter acquired the former, and therefore has experience with merging two companies’ content/programming operations, which could be useful,” he notes.
Sports rights are key as Netflix competes for subscribers and advertising with rivals from DAZN to Amazon, Apple and YouTube. Netflix closed its 2026 upfront in August with advertising commitments nearly doubling on strong demand for live including the NFL, WWE, MLB and 2027 Women’s World Cup The streamer just acquired Spanish and Andorran rights to all 104 matches of the 2030 FIFA World Cup.
Third-party content partnerships and integrations are potentially attractive near-term catalysts, particularly with the likes of Peacock or Fox One that could bring premium live sports onto the platform without significant upfront rights investment, said Condon.
Sarandos has also pointed to Netflix’s TF1 partnership in France as a new and promising model.
And the importance of Netflix’s advertising execution is rising, noted Joyce. Rounds of streaming price hikes are nudging more viewers to cheaper ad tiers, with significant international growth potential. The connected TV market is growing. So is the ad market for creator and short-form video, another potential growth area for the streamer. It could also simply add more inventory.
Netflix has forecast $3 billion in ad revenue for this year.
In theatrical, the streamer this past weekend started a major experiment with much longer windows and official box office reporting. It opened award-winning Spanish film La Bola Negra in limited release with a 45-day window and has a handful of others, including high-profile wide releases, teed up for cinemas.
Management has been wary of calling this a strategy shift and appears focused on evaluating each film individually, balancing demand from moviegoers with the potential impact on Netflix viewing, Condon noted. He believes theatrical releases can help build greater fandom around Netflix IP and boost the platform — a case that theater owners have been pressing for years.