Netflix Stock Slides After Weak Holiday Forecast and Ad Sales Cut
Netflix shares slid Wednesday after the streaming giant warned that its holiday-quarter results would fall short of expectations and cut its forecast for advertising sales, adding to growing worries on Wall Street about how fast the company can keep growing.
The stock fell about 6% in premarket trading Wednesday to around $64, after Netflix released its third-quarter results Tuesday afternoon, Yahoo Finance reported. Shares had already closed down 1.66% at $68.69 on Tuesday before the results came out, and the stock is now down about 48% from its June 2025 record high. That puts Netflix shares at their lowest level in about two years, a steep fall for a company that was once one of Wall Street's favorite growth stories.
A Solid Quarter, but a Weak Outlook
On the surface, Netflix's latest quarter looked fine. Revenue rose 12% to $12.87 billion, in line with forecasts, and earnings of 87 cents per share beat analysts' estimate of 82 cents, The Next Web reported.
But that 12% growth was Netflix's slowest in close to three years.
The bigger problem was the outlook. Netflix expects fourth-quarter revenue of $13.44 billion, below the $13.51 billion analysts were looking for. It forecast earnings of 67 cents per share, short of the 73 cents Wall Street expected.
For the full year, Netflix now expects revenue of about $51.1 billion, at the bottom of the range it set in July.
Ad Business Falls Behind
Netflix also lowered its 2026 advertising revenue target to about $2.7 billion, down from roughly $3 billion. The company said some of its ad tools rolled out more slowly than planned.
"We are currently a bit behind our aggressive target for the year," co-CEO Greg Peters said.
Advertising has been a key part of Netflix's growth plans since it launched its cheaper ad-supported plan. The company said that plan will expand to 15 more countries in 2027, starting in March.
Co-CEO Ted Sarandos acknowledged the company needs to do more, especially in the U.S. "I know that we could do better," he said.
Layoffs and a Leadership Shake-Up
The results come on the heels of other big changes at the company. Last week, Netflix announced it would cut about 1,000 jobs, or roughly 6% of its workforce, its biggest round of layoffs since 2022. Those job cuts will shave about 1.2 percentage points off its fourth-quarter operating margin, which Netflix expects to come in at 26%.
Netflix also replaced its content chief, Bela Bajaria, with former Disney executive Peter Rice.
Meanwhile, the company spent $4.8 billion buying back its own shares during the quarter, its largest quarterly buyback ever.
What Analysts Are Saying
Several Wall Street firms lowered their price targets after the report. Bernstein cut its target to $80, and MoffettNathanson lowered its target to $90. Needham analyst Laura Martin downgraded the stock to Hold from Buy, saying she worries that rising competition will squeeze profits and slow revenue growth.
Bloomberg Intelligence analyst Geetha Ranganathan said the fourth-quarter outlook points to "a slowing growth algorithm."
There are also questions about subscribers. Data from analytics firm Antenna suggests Netflix lost U.S. subscribers every month through September, not counting bundle deals, though a Netflix spokesperson told Reuters the data does not reflect its business.
Peters pushed back on concerns about U.S. viewers, saying, "our engagement is solid."
What's Coming Next on Netflix
Netflix is counting on a strong lineup to finish the year. The fourth quarter includes three NFL games, the final season of "Emily in Paris" and a heavyweight boxing match between Tyson Fury and Anthony Joshua. The streamer also recently released the trailer for Greta Gerwig's "Narnia" film.
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