Netflix forecast third-quarter revenue below Wall Street estimates, sending its shares down nearly 9% after hours despite stronger quarterly earnings.
Key Points:
- Netflix projected $12.86 billion in third-quarter revenue, below the $13 billion analyst estimate.
- Shares fell to $67.78 in after-hours trading after closing Jul. 16 at $74.35.
- Advertising growth and live events now carry more weight as subscriber expansion slows.
Netflix Guidance
Netflix expects third-quarter revenue of $12.86 billion, compared with Wall Street’s $13 billion forecast, while projected earnings per share also fell below analysts’ expectations. The reaction was immediate. The stock dropped 8.98% after Thursday’s closing bell, overshadowing second-quarter earnings that beat estimates and revenue of $12.56 billion that narrowly missed forecasts.
Shares ended regular trading on Jul. 16 at $74.35, up 0.91%, before falling to $67.78 after the company released its guidance. The stock has lost more than 21% in 2026 and 41% over 12 months, leaving it well below its roughly $133 record from June 2025.
The selloff came during a volatile week shaped by bank earnings, interest-rate testimony from the Federal Reserve chair and sharp earnings-driven moves across the Nasdaq and S&P 500.
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Streaming Growth
Paolo Pescatore, an analyst at PP Foresight, called the outlook “a naturally maturing growth profile,” rather than evidence that the streaming business is deteriorating. However, he said high investor expectations leave Netflix with less room for mistakes as revenue and subscriber growth settle into a slower pace.
Netflix also said it will publish its viewing-hours report once a year, reducing the frequency of a metric investors use to track audience engagement.
The shift begins in January 2027. Management wants investors to focus more closely on revenue and operating profit, while the company maintains its goal of roughly doubling annual advertising revenue to $3 billion after engagement rose 2% in the first half.
Netflix reports again on Oct. 20. Investors will compare the results with the cautious forecast and assess whether advertising, live programming and other formats can offset weaker subscriber gains without pressuring margins.
The decline marks a sharp reversal from June 2025, when Netflix traded near an all-time high of about $133, as slower expectations have forced investors to value it more like a mature media company than a rapidly expanding streaming disruptor.
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