Netflix Tumbles to Two-Year Low as Q3 Forecast Misses, Stoking Streaming Growth Fears

Netflix Inc. (NFLX) shares plunged as much as 12.2% in after-hours and pre-market trading Friday, hitting a 21-month low, after the company’s third-quarter revenue and profit forecasts fell short of Wall Street expectations. The move deepened a year-long slide that has wiped nearly 50% from the stock’s July 2025 all-time high of $134.

The streaming giant reported second-quarter results that largely met or barely exceeded consensus estimates, but investors focused on the weaker outlook, which signaled a further deceleration in revenue growth.

**Guidance Misses Across Key Metrics**

Netflix forecast third-quarter revenue of $12.86 billion and earnings per share of $0.82, according to several sources. Analysts had been expecting $13.0 billion in revenue and $0.84 per share, according to reports from NDTV Profit and Nasdaq.

The company also narrowed its full-year revenue guidance to $51.0 billion–$51.4 billion from a prior range of $50.7 billion–$51.7 billion. The midpoint of the new range falls short of the consensus estimate of $51.38 billion, as reported by Zero Hedge.

Operating income guidance for the third quarter was $4.27 billion, missing the $4.36 billion consensus, and the operating margin forecast of 33.2% also came in below expectations, according to Zero Hedge.

**Q2 Results: Mixed, but Not Bad**

For the second quarter, Netflix posted revenue of $12.56 billion, up 13% year-over-year and a record quarterly high. That was slightly below the $12.58 billion consensus forecast, according to NDTV Profit and another Nasdaq report. However, another Nasdaq source characterized revenue as matching estimates.

GAAP net income was approximately $3.4 billion, or $0.80 per share, beating the $0.79 estimate by a penny, according to multiple sources. Revenue growth was driven by subscription price increases, higher advertising revenue, and member growth across all regions.

Free cash flow fell sharply to $1.53 billion from $2.3 billion a year ago, partly due to higher cash tax payments, according to Nasdaq’s Howard Smith. Zero Hedge reported free cash flow of $1.53 billion missed the $2.72 billion estimate.

**Engagement Reporting Change Adds to Unease**

Netflix announced it will publish its “What We Watched” engagement report annually instead of twice a year, starting in 2027. The company said the change is intended to focus investors on financial metrics such as revenue, profit, and free cash flow.

Some investors interpreted the move as the company hiding something, according to Nasdaq’s Anders Bylund. Netflix had already stopped reporting quarterly subscriber numbers in 2025, NDTV Profit noted.

**Broader Sector Pressure**

The selloff extended to streaming peers. Walt Disney Co. (DIS) closed down 2.05% and Comcast Corp. (CMCSA) fell 1.29% on the day, highlighting sector-wide pressure, according to Nasdaq.

Netflix shares have fallen more than 40% over the past 12 months as investors reassess growth prospects amid intensifying competition from Disney, YouTube, and TikTok, as well as failed acquisition talks with Warner Bros. Discovery, as reported by multiple sources.

**Analyst Views Remain Divided**

Despite the selloff, some analysts maintained a positive long-term view. Bernstein analyst Laurent Yoon said the current valuation does not reflect Netflix’s medium- and long-term growth potential, according to NDTV Profit. Eric Clark, portfolio manager of the LOGO ETF, said investors should focus on the fall season when engagement improves and noted the company’s advertising business remains a high-margin growth driver.

Wolfe Research analyst Peter Supino called the quarter “a win for the bears,” warning the stock price already discounts years of deceleration, as reported by NDTV Profit.

Netflix management said in its shareholder letter that building out the advertising business remains a top priority and that it is on track to deliver approximately $3 billion in ad revenue in 2026. The company also highlighted investments in live sports, video podcasts, and AI-driven personalization to sustain growth.

At its closing price of $68.95, shares traded at roughly 21 times trailing earnings and 18 times forward estimates, well off peak multiples. Trading volume surged to 141 million shares, more than three times the three-month average.