Netflix shares dropped 6 percent in premarket trading on Wednesday, after the company's tepid profit and advertising outlook deepened investor concerns about slowing viewership and revenue growth amid stiff competition in the streaming industry.
The stock has declined more than 26 percent this year and, if current losses hold, the streaming giant is set to shed about $19 billion in market value.
The share performance underscores the mounting challenges facing Netflix — from losing a bidding war for Warner Bros Discovery earlier this year to defending its paid subscription model against free digital rivals and competing in an increasingly consolidated streaming market.
As viewers shift towards free, user-generated platforms such as YouTube and TikTok, Netflix is also contending with changing preferences in favour of short-form video over premium content.
Netflix, which has stopped sharing subscriber numbers since 2025, reported an 11.8 percent rise in third-quarter revenue to $12.87 billion, in line with Wall Street forecasts but the slowest increase in nearly three years.
The company also reduced its advertising forecast for 2026 to roughly $2.7 billion, down from about $3 billion.
"Growth has clearly slowed at Netflix," Evercore ISI analysts said in a note.
Evercore attributed the slowdown to market maturity, consistent competition from platforms such as YouTube, Amazon and Disney, potential challenges from short-form content on TikTok and YouTube, and content mis-execution.
In a post-earnings call, Co-CEO Ted Sarandos acknowledged that the company "could do better."
More than 20 brokerages have lowered their price targets on the stock following the results, according to LSEG-compiled data.
Leadership Change Signals Action to Address Growth Concerns
Co-CEO Ted Sarandos said on Tuesday the company plans to focus on its core business of producing quality TV shows and movies to make Netflix a must-have service, and the recent executive shakeup was a step towards that goal.
The company recently replaced Chief Creative Officer Bela Bajaria and said film chief Dan Lin was departing, signs that it is resetting its programming strategy, while it also cut 6 percent of its workforce.
Analysts expect most of the challenges, including slowing engagement and revenue growth, to be addressable.
BofA Global Research analysts said the leadership change and layoffs were "a signal that management is focused on improving content output and creative hit rates."
Netflix trades at nearly 18.28 times expected earnings over the next 12 months, compared with 14.76 times for Walt Disney and 6.26 times for Comcast.