Skeptical Wall Street Dings Netflix On Soft Revenue Forecast
By Jill Goldsmith
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Wall Street is not impressed with Netflix's latest earnings, particularly its softer-than-expected revenue forecast for the third quarter.
"It’s a more competitive landscape and they need to make some changes," said Mark Mahaney, an analyst at Evercore, on CNBC.
The streamer anticipated full-year 2026 revenue of $51.1 billion, up 13% year-over-year, missing 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 company stated, attributing it to "a slightly slower than expected rollout of some ad product capabilities."
The shares are down 5% in late trading, having fallen almost 45% in the last 52 weeks.
Netflix's Q4 revenue is set at $13.4 billion, representing 12% year-over-year growth. The quarter also reflects the impact of a round of layoffs affecting approximately 1,000 employees, including top executives like Bela Bajaria and Dan Lin.
The company acknowledges slowing engagement growth and the failure of its bid for Warner Bros. as contributing factors to its recent challenges.
"We know there’s some investor concern about our view hours growth," said co-CEOs Ted Sarandos and Greg Peters in their earnings report.
They will address analysts' questions during the usual post-earnings video call, needing to provide a compelling strategy moving forward.