Netflix numbers for the third quarter are out and Wall Street is not impressed, dinging the giant streamer’s stock in particular for its softer than expected revenue forecast.
“It’s a more competitive landscape and they need to make some changes,” Mark Mahaney, an analyst at Evercore, said on CNBC Tuesday, parsing the numbers.
The company anticipated full year 2026 revenue of $51.1 billion, up 13% year over year but a hair below the midpoint of its prior guidance.
“While subscription revenue growth has outperformed our expectations, we currently expect 2026 ad revenue of ~$2.7B vs. approximately $3B previously,” the streamer said, attributing it to the “slightly slower than expected rollout of some ad product capabilities.”
The shares are down 5% in late trading. They’ve fallen almost 45% in the last 52 weeks.
It set current Q4 revenue of $13.4 billion, repping year-on-year growth of 12%. The quarter will also see an impact from a deep round of layoffs, about 1,000 employees, including some top executives.
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The company has seen engagement growth slow, its bid for Warner Bros. flop along with its share price over the past year, the recent layoffs, including the departures of content chief Bela Bajaria and film head Dan Lin, are clearly a reset, but the company needs to explain how. Peter Rice is stepping in to replace Bajaria, and Lin until a successor is named.
“We know there’s some investor concern about our view hours growth,” said co-CEOs Ted Sarandos and Greg Peters in a letter accompanying its latest earnings report.
They’ll take questions from analysts shortly on the usual post-earnings video call and will need to do a heroic job explaining strategy going forward.
“We do seek to accelerate growth in view hours as well, and we’re confident we’ll do that by relentlessly focusing and executing against the aforementioned strategy. That confidence comes from seeing strong results when we execute well on our core strategy.” He cited several Q3 hit series in India that drove viewership and revenue.