Netflix's forecast disappointed Wall Street: shares plummeted 9% amid slowing growth
Streaming giant Netflix (NFLX) faced a sharp drop in stock prices after publishing a weak forecast for the third quarter. During after-hours trading on July 16, the company's shares lost nearly 9% of their value, plunging to $67.78. The reason is expected revenue of $12.86 billion, which fell short of the consensus analyst forecast of $13 billion.
Despite a strong second-quarter report and net profit exceeding market expectations, the positive effect was completely offset by management's cautious outlook for the coming months. Investors are extremely sensitive to any signs of a slowdown in new subscriber growth, especially against the backdrop of the approaching second half of 2026.
Shares approach a two-year low
On July 16, trading closed at $74.35 per share, up 0.91% from the previous day. However, after the forecast was published, the stock price crashed by 8.98% to $67.78. Since the beginning of the year, Netflix shares have lost over 21%, and over the past twelve months — 41%. The current price is more than half of the all-time high of around $133 set in June 2025.
The current decline coincides with a period of general volatility in the stock market, triggered by mixed earnings reports from the banking sector and recent statements by the Fed Chair on the future trajectory of interest rates. The tech indices Nasdaq and S&P 500 are showing heightened nervousness in response to corporate news.
Analysts note a slowdown in growth
Experts describe the current situation as a "natural maturation of the business." This does not mean a deterioration in prospects, but the margin for error for Netflix is now significantly higher — market expectations for the company remain very high. The company announced that starting January 2027, it will publish viewership data once a year to shift the focus to revenue and operating profit.
Netflix confirmed its intention to roughly double its advertising revenue to $3 billion per year. In the first half of 2026, audience engagement grew by 2%. It is clear that the company is betting on advertising and live streaming as new growth drivers.
Third-quarter results will be published on October 20. Investors are waiting to see if Netflix can compensate for the slowdown in subscriber growth with its new focus on advertising and live broadcasts.
My opinion: Netflix's decline is not so much a company failure as a signal of market maturity. The strategy of doubling advertising revenue looks ambitious, but in the face of stiff competition from Disney+ and Amazon Prime, this may be the only path to restoring investor confidence. The key question is whether Netflix can monetize its audience as effectively as social networks do.