Netflix Stock Slides As Revenue Misses Estimate, Company To Give Fewer Engagement Updates

Netflix reported second-quarter 2026 earnings and revenue roughly in line with Wall Street estimates on Thursday, but its stock fell more than 8% in after-hours trading as investors reacted to the company's forward guidance and engagement metrics.

For the quarter ended June 30, 2026, Netflix posted earnings per share of 80 cents against an estimate of 79 cents, as per media reports citing analysts polled by LSEG. Revenue came in at $12.56 billion, up 13% year over year, slightly below the $12.59 billion analysts had expected. The company attributed the growth to membership gains, pricing changes and higher advertising revenue.

Net income for the quarter stood at $3.40 billion, or 80 cents per share, compared with $3.13 billion, or 72 cents per share, in the same period last year.

Third-Quarter And Full-Year Guidance

Netflix, led by co-CEOs Ted Sarandos and Greg Peters, forecast third-quarter revenue of $12.86 billion and diluted earnings per share of 82 cents. Both figures fell short of analyst expectations of $13 billion in revenue and 84 cents in earnings per share, according to LSEG.

The company narrowed its full-year 2026 revenue guidance to a range of $51 billion to $51.4 billion, down from its earlier forecast range of $50.7 billion to $51.7 billion. It said third-quarter revenue is expected to grow 12% and described its overall 2026 outlook as consistent with earlier projections.

"Our financial performance remains solid and we're on track to meet our objectives for the year," Netflix said in its quarterly letter to shareholders, as per reports.

Earlier this year, Netflix raised subscription prices across all its streaming plans. The company said the impact of those increases matched prior price changes and expectations.

Engagement And Reporting Changes

Netflix said it would reduce the frequency of its viewing-hours report from twice a year to once a year, starting in January 2027, in order "to keep the focus on our primary financial metrics, revenue and operating profit." The company had already stopped publishing quarterly subscriber numbers in 2025.

Members watched more than 97 billion hours of content in the first half of the year, with total viewing hours growing 2%, compared with 1.5% growth in the same period a year earlier. Netflix described engagement as "healthy," pointing to live events as a major driver of viewership.

Questions about engagement dominated analyst queries during Thursday's earnings call, following earlier reports that viewership for Netflix series declines after the first season. Sarandos said there was no material change in second-season viewership compared to first seasons. "Our season two fall off has actually slightly improved this year relative to last year, so no changes in release strategies," he said.

Peters added that viewing hours alone do not directly determine financial performance. "I'll start by saying there is not a linear relationship between viewing hours and revenue and profit, because all hours are not created equal," he said on the call.

In April, Netflix said it had more than 325 million paying members and continued room to grow that base. The company reiterated its earlier forecast that advertising revenue would reach $3 billion by the end of the year, aided by a growing slate of live events including an expanded NFL schedule.

Peters said on a post-earnings video that Netflix was considering a free, advertising-supported option in some markets but had no immediate plans to launch one. The company also said generative artificial intelligence tools were being used by producers in around 300 titles, mostly during post-production.

Netflix's stock has fallen about a fifth in value this year.