Netflix plunged 9%: disappointing revenue forecast overshadowed positive earnings report
Streaming giant Netflix (NFLX) triggered a massive sell-off of its shares after publishing a weak forecast for the third quarter. The company expects revenue of $12.86 billion, which fell short of the consensus forecast of Wall Street analysts, who expected $13 billion. The market reaction was immediate: in after-hours trading on the evening of July 16, the shares lost nearly 9% of their value, plunging to $67.78.
This decline completely erased the positive effect from the strong second-quarter report. Although the company's net profit exceeded expectations, investors are far more concerned about the apparent slowdown in business growth. Shareholders are extremely wary of signs of subscriber market saturation, especially against the backdrop of the approaching second half of 2026, when competition in the sector promises to be particularly fierce.
Shares approach two-year low
During the day on July 16, trading closed at $74.35 per share, which was 0.91% higher than the previous day. However, after the forecast was published, the quotes collapsed by 8.98%. 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 significantly below the historical high of around $133, set in June 2025.
The current downturn coincides with a period of general uncertainty in the stock market, caused by mixed earnings reports from the banking sector and recent statements by the Fed Chairman about the future trajectory of interest rates. Against this backdrop, the technology indices Nasdaq and S&P 500 are showing increased volatility.
Analysts point to growth slowdown
The market is clearly signaling: the era of extensive growth for Netflix through new subscribers is coming to an end. The company is essentially confirming this by transitioning to a new strategy — focusing on revenue and operating profit rather than user numbers. Starting in January 2027, Netflix will publish viewing hours data only once a year, shifting the emphasis to audience monetization.
The company confirmed its intention to roughly double advertising revenue — to $3 billion per year. In the first half of 2026, audience engagement grew by 2%, which so far does not compensate for the slowdown in subscriber growth.
The next earnings report for the third quarter is scheduled for October 20. Investors will be closely watching whether Netflix can offset the slowdown in subscriber growth with its new focus on advertising and live broadcasts.
My analysis: The weak market reaction to Netflix's report is a classic example of how investor expectations, fueled by years of growth, collide with the reality of a mature business. The company's strategy is correct — diversifying revenue through advertising — but it will take time to bear fruit. For now, the shares will remain under pressure, and the key support level will be the psychological mark of $65.