Key facts
- Netflix shares tumbled 9.2% before the market open on Friday.
- The company's earnings per share and revenue forecast for the quarter fell below analyst estimates.
- This marks the second consecutive quarter of weaker-than-expected earnings forecasts.
- Analysts expressed concerns about subscriber growth, particularly among younger audiences.
- Netflix will change its viewing-hours report frequency from twice a year to once a year starting in January 2027.
Netflix shares experienced a significant decline of 9.2% in pre-market trading on Friday, following a weaker-than-expected earnings forecast for the current quarter. This marks the second consecutive period where the streaming giant's outlook has fallen short of analyst estimates, intensifying concerns about its ability to maintain growth momentum.
Analysts attribute the slowdown to several factors, including increased competition for user attention from traditional media like Walt Disney and social media platforms such as YouTube, particularly among younger demographics. Jeffrey Wlodarczak of Pivotal Research Group noted that the company's narrative "lacks excitement" and that subscriber growth remains critical.
To counter these trends, Netflix is expected to implement more aggressive price increases and further investments in content. The company also announced changes to its reporting schedule, reducing its twice-yearly viewing-hours report to an annual release starting in January 2027, and having already stopped publishing quarterly subscriber numbers in 2025.
Analysts at Jefferies pointed to a weaker content slate in the second half of the year compared to the previous year as a factor fueling the bearish sentiment. The company's shares are currently trading at 19.92 times 12-month forward profit estimates, significantly higher than competitors like Walt Disney (13.54) and Comcast (6.57). The stock has fallen more than 44% since reaching an all-time high in June 2025.