Netflix Shares Slide as Revenue Miss and Softer Outlook Eclipse Profit Growth
Netflix shares fell sharply in after-hours trading after the streaming company narrowly missed Wall Street’s second-quarter revenue expectations and issued a weaker-than-anticipated outlook, overshadowing higher profits and continued growth in its advertising business.
Netflix generated $12.56 billion in revenue during the quarter, up more than 13% from a year earlier but slightly below analysts’ average estimate of $12.58 billion. The company reported net income of about $3.4 billion, or 80 cents per share, compared with $3.13 billion, or 72 cents per share, in the same period last year.
Earnings per share edged past the Wall Street consensus of 79 cents, but the modest beat was not enough to reassure investors concerned about slowing growth and increasing competition for viewers’ attention.
Netflix shares dropped by as much as 9% in extended trading following the results, after closing the regular session at $74.35. The stock had already lost around one-fifth of its value since the beginning of 2026.
Investor sentiment was further weakened by the company’s third-quarter forecast. Netflix expects revenue of about $12.86 billion and earnings of 82 cents per share, both below prevailing market estimates.
The company also narrowed its full-year revenue projection to between $51 billion and $51.4 billion. Its previous guidance had called for revenue of between $50.7 billion and $51.7 billion, meaning the updated range removed much of the potential upside anticipated by some investors.
Netflix said membership growth and price increases continued to support revenue during the quarter, while its advertising business remained one of its fastest-growing operations. The company expects advertising revenue to reach around $3 billion in 2026.
However, the earnings announcement renewed questions about user engagement and the amount of time audiences spend on the platform.
Netflix said members watched approximately 97 billion hours of programming during the first half of 2026, representing growth of about 2% from the comparable period. The modest increase came despite major investments in original films, television series and live programming.
The company also announced that it will publish its «What We Watched» engagement report once a year from 2027, rather than twice annually.
Netflix said the change would allow investors to focus more closely on financial performance, including revenue, operating margin and cash flow. Some analysts, however, viewed the reduced disclosure as a setback for transparency at a time when the company faces stronger competition from YouTube, TikTok, Instagram and rival streaming services.
Management argued that total viewing hours do not provide a complete measure of a title’s commercial value. Live events, for example, account for a small proportion of overall viewing but can attract new subscribers, strengthen advertising demand and reduce cancellations.
Netflix is expanding its live content portfolio while experimenting with video podcasts, shorter episodes and creator-led programming as it seeks to compete for audiences beyond the traditional subscription-streaming market.
The company is also increasing its use of artificial intelligence in areas including content production, recommendations and natural-language search. Management maintained that AI would support creators and improve efficiency rather than replace human storytelling.
Despite the market disappointment, Netflix continues to record healthy revenue growth, strong profitability and relatively low subscriber cancellation rates. More than one-third of viewing hours during the period came from non-English-language programming, underlining the international reach of its content catalogue.
The share-price decline nevertheless reflects the high expectations surrounding the company. With Netflix already commanding a substantial global audience, investors are increasingly focused on whether advertising, pricing and new entertainment formats can generate sufficiently strong growth to support its valuation.