Netflix Q3 revenue and earnings outlook fell short of Wall Street targets as the streaming giant said it would cut the frequency of viewing-hours reports from six-monthly to annually as it seeks new avenues of growth. Shares fell by around 8.6 per cent in after-hours trading on July 16th to $67.99 (€59.38).
Netflix reported Q2 earnings that beat estimates and revenue that was roughly in line with forecasts. Revenue grew 13.4 per cent year over year to $12.56 billion, slightly underperforming Bloomberg consensus estimates of $12.58 billion. Revenue growth also moderated from 16.2 per cent in the first quarter of this year.
Netflix shares are now down 40 per cent over the past 12 months.
“The results of our recent price changes are consistent with prior changes and our expectations. We are leveraging AI to provide a more personalised, immersive and interactive experience for members, enhance ads capabilities for brands, and improve the quality of our series and films. The entertainment industry remains dynamic and competitive. We aim to stay ahead by executing against our three areas of focus: delivering more entertainment value, leveraging technology to improve every aspect of our service, and improving monetisation,” the company said in a letter to shareholders.
Netflix also reported that is subscribers watched 97 billion hours of content on its service in H1 2026 – a record half. The most watched movie was War Machine (with 147 million views), whilst His & Hers topped series (104 million views) closely followed by Season 4 of Bridgerton (100 million views).
Responding to the results, Emarketer senior analyst Ross Benes, said: “Netflix’s desire to add more sports is seen in its shareholder letter where the company cites the ‘competitive impact’ of the Olympics and World Cup on its viewing time. Netflix repeatedly highlights sports in its shareholder letter despite live programming representing just 5 percent of its content budget. Because live events are among Netflix’s strongest levers for obtaining new signups despite accounting for only 1 percent of time spent on the service, the company will attempt to buy high profile sports rights as soon as the top leagues seek renewals. While Netflix will become more active in bidding on sports rights, the company has a long ways to go before its sports slate in competitive with broadcasters like ESPN, Fox and NBC. For Netflix, the game just started.”
Amelia MacPherson, media and technology senior analyst at RSM UK, said: “While Netflix’s operating profit and earnings per share exceeded expectations, revenue fell marginally short of forecasts. On the face of it, this is a solid set of results. However, they have been partly overshadowed by weaker guidance for the third quarter, with Netflix forecasting a further slowdown in revenue growth. That has prompted investors to look beyond the headline numbers and question whether the streaming giant can sustain the level of growth that has historically justified its premium valuation.”
“It is clear that member engagement remains a key area of focus. Management have reiterated that delivering greater value for members remains central to the business strategy, with continued plans to broaden the platform beyond traditional on-demand streaming through live entertainment, video podcasts and cloud TV games.”
“Netflix has historically been valued more highly than many of its peers because investors believed it could continue growing without relying on major acquisitions. The attempted Warner Bros Discovery deal in February therefore raised an important question: does management believe organic growth alone is no longer enough?”
“Its decision to withdraw the Warner Bros offer did however leave the business in a stronger cash flow position, including the $2.8bn termination fee received as compensation for Warner Bros accepting a superior offer. The key question for investors is whether Netflix can use this additional financial flexibility to reignite growth and justify its premium valuation. As it continues to expand into diversified platforms, further investment in premium content or strategic partnerships may also be required to demonstrate that it can deepen engagement, increase revenues and create new avenues for growth beyond simply raising subscription prices,” concluded MacPherson.