Netflix loses 9% of its market capitalization: weak revenue forecast overshadows positive report
Streaming giant Netflix (NFLX) faced a sharp sell-off of its shares after publishing its third-quarter forecast. The company expects revenue of $12.86 billion, which fell short of the consensus forecast from Wall Street analysts, who estimated the figure at $13 billion. As a result, on the evening of July 16, shares lost nearly 9% of their value in after-hours trading, offsetting the positive effect of a strong second-quarter report.
Although Netflix's net profit exceeded market expectations, overall quarterly revenue still slightly missed forecasts. Investors are extremely wary of the slowdown in new subscriber growth — clear signs of decelerating business growth raise questions, especially ahead of the second half of 2026.
Shares approach a two-year low
During the day on July 16, trading closed at $74.35 per share — 0.91% higher than the previous day. However, after the forecast was released, the stock price plummeted by 8.98% to $67.78. Since the beginning of the year, the share price has fallen by more than 21%, and over twelve months — by 41%. The shares are now trading well below the historical high of around $133, set in June 2025.
The current downturn coincides with a period of general unease in the stock market, triggered by mixed earnings reports from the banking sector and recent statements by the Federal Reserve Chairman regarding the future trajectory of interest rates. Against this backdrop, the technology indices Nasdaq and S&P 500 have shown increased volatility.
Analysts point to slowing growth
Experts note that the current situation is an example of "natural business maturation." This does not mean a deterioration in prospects, but the margin for error for Netflix is now higher: market expectations for the company remain very high. The company also stated that starting January 2027, it will publish viewership data once a year to focus attention on revenue and operating profit.
Netflix confirmed its intention to roughly double advertising revenue — to $3 billion per year. In the first half of 2026, audience engagement grew by 2%. The company will release its third-quarter results on October 20. Investors are waiting to see if Netflix can compensate for the slowdown in subscriber growth with a new focus on advertising and live broadcasts.
My analysis: The market clearly overestimated Netflix's ability to maintain its previous subscriber growth rates. Now the bet is on monetizing the existing audience through advertising — this is a logical but risky move amid fierce competition from Disney+ and other platforms.