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Netflix’s shares fell more than 8 per cent on Thursday despite as-expected earnings after the streaming giant forecast its worst revenue growth in three years.
Its projection of 11.7 per cent year-on-year growth in the third quarter came in below Wall Street consensus and would mark the slowest expansion since 2023.
The stock fell after hours even as Netflix largely met expectations for its second-quarter earnings. It reported price rises in the first half had “gone well”, helping to drive revenue 13 per cent higher year on year in the second quarter to $12.6bn, alongside increased ad revenue. It expects ad revenue to double to about $3bn in 2026.
Netflix is facing increased pressure as its shares have declined 21 per cent since January, continuing a slide that has wiped more than $250bn from the company’s value since a peak in the middle of last year.
Investors have worried about increased competition and questions about Netflix’s strategy following its failed attempt to buy Warner Bros Discovery.
Netflix’s bid for WBD, ultimately bested by Paramount, was taken by some analysts as signalling a change in direction for a company that traditionally has built rather than bought its businesses.
Since then, it has also looked at a bid for Roku, the streamer that Fox then acquired, leading some to ask whether it was confident enough in its existing strategy and worry over the impact of stronger rivals.
Netflix has been piling money into live events and sports as it tries to diversify away from the on-demand streaming that has made it into an entertainment giant.
Viewing grew 2 per cent in the first half to more than 97bn hours — compared with 1.5 per cent growth in 2025 — despite popular sporting events such as the football World Cup shown on rival streamers and broadcasters.
This year’s price rises — in markets including the US, Mexico and Spain — increased a standard subscription in the US from $17.99 to $19.99 a month and raised the cost across all its plans as well as the fees for extra users on the same subscription.
Netflix no longer discloses subscription numbers on a quarterly basis, which means it is not possible to know whether the price increases had a noticeable effect on new customers.
It has recently added content from video podcasts and YouTubers with creators Danny Go! and Salish & Jordan Matter. It has also struck partnerships with publishers including Condé Nast, Hearst and People to add lifestyle content.
Netflix on Thursday narrowed its forecasted full-year revenue range from $51bn to $51.4bn for 2026, which represents 13 per cent to 14 per cent growth, and held to its prediction of a 31.5 per cent operating margin.
The stock fell sharply after its last earnings report in April when Netflix gave a disappointing financial forecast and said founder Reed Hastings would step down as chair of the group’s board in June.
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