Netflix falls 6% after cutting its 2026 ad revenue forecast and guiding Q4 below estimates
Netflix shares fell about 6% in premarket trading on Wednesday after the streamer cut its full-year advertising forecast and gave a weaker-than-expected fourth-quarter outlook, Reuters reported.
What disappointed
Third-quarter earnings of 87 cents a share beat the 82-cent estimate, according to Newsquawk. But the outlook did the damage.
Netflix forecast fourth-quarter revenue of $13.44 billion, slightly below the $13.52 billion expected. It narrowed its 2026 revenue forecast to $51.1 billion, from a previous range of $51.0 billion to $51.4 billion.
| Measure | Netflix guide | Expected / previous |
|---|---|---|
| Q4 EPS | $0.67 | $0.73 expected |
| Q4 revenue | $13.44bn | $13.52bn expected |
| 2026 revenue | $51.1bn | $51.0–51.4bn previous range |
| 2026 ad revenue | ~$2.7bn | ~$3.0bn previous |
Sources: Newsquawk; Reuters.
A crowded fight for attention
Newsquawk said Netflix reported its slowest revenue growth in three years, and cited slower ad growth, flat viewing and tougher competition.
Reuters said viewers are shifting towards free, user-generated platforms such as YouTube and TikTok, and towards short-form video. Earlier this year Netflix lost a bidding war for Warner Bros Discovery.
Netflix is still the leader in streaming, but the competitive landscape for people's attention is much broader than streaming alone, particularly with the growth of short-form video.
Restructuring under way
Netflix cut about 6% of its workforce and reshuffled its leadership this month, Reuters reported. Co-CEO Ted Sarandos said on Tuesday the company would focus on making quality TV shows and films so that Netflix stays a must-have service.
Management said it aims to keep revenue growth in double digits in 2027, according to Newsquawk.
| Company | Forward P/E (next 12 months) |
|---|---|
| Netflix | 18.28x |
| Walt Disney | 14.76x |
| Comcast | 6.26x |
Source: Reuters.
