Netflix shares fell sharply in after-hours trading on Thursday after the streaming company issued a third-quarter revenue and earnings forecast below Wall Street expectations.
The company also announced plans to reduce how often it publishes viewing-hours data as it shifts attention toward revenue, operating profit and new growth areas.
Netflix Stock Drops After Weak Forecast
Netflix shares declined nearly 8.6% in extended trading to around $67.99.
The company expects to generate $12.86 billion in revenue between July and September. It also forecast diluted earnings of $0.82 per share.
Analysts surveyed by LSEG had expected revenue of approximately $13 billion and diluted earnings of $0.84 per share.
The lower-than-expected forecast raised concerns about whether Netflix can maintain the rapid growth investors have come to expect.
Netflix Searches for New Growth Drivers
After years of strong subscriber expansion, Netflix is now focusing on advertising, live programming and video games.
The company is attempting to reduce its reliance on membership growth as its core streaming business becomes more mature.
Netflix shares have lost roughly one-fifth of their value this year as investors question how quickly these newer businesses can contribute to future revenue and earnings.
Analysts See a More Mature Growth Phase
PP Foresight analyst Paolo Pescatore said Netflix’s forecast may reflect management caution and a naturally slowing growth profile rather than a sudden deterioration in the business.
He added that Netflix remains in a strong position but appears to be entering a steadier phase of expansion.
According to Pescatore, the company now has less room for disappointment because investor expectations remain consistently high.
Viewing-Hours Reports to Become Less Frequent
Netflix said it will publish its viewing-hours report once per year beginning in January 2027.
The company currently releases the report twice annually.
Netflix said the change would allow investors to focus more closely on its primary financial measures, including revenue and operating profit.
The company had already stopped reporting quarterly subscriber totals in 2025.
Quarterly Results Meet Analyst Estimates
For the recently completed quarter, Netflix reported results that were broadly in line with market expectations.
Revenue reached $12.56 billion, while diluted earnings came in at $0.80 per share.
Popular releases during the quarter included the crime drama “I Will Find You” and the animated film “Swapped.”
Netflix said its financial performance remained solid and that it was still on course to achieve its full-year objectives.
Streaming Competition Continues to Grow
Netflix faces increasing competition from traditional entertainment companies, social media platforms and online video services.
Its rivals include Walt Disney, YouTube and mobile-focused platforms such as TikTok.
YouTube has become an increasingly important competitor in living-room viewing, while short-form video applications continue to attract younger audiences on mobile devices.
Netflix said in April that it had more than 325 million paying members and still believed there was room to expand its subscriber base.
Advertising Business Remains a Priority
Netflix continues to invest heavily in its advertising-supported subscription tier.
The company repeated its forecast that advertising revenue would reach $3 billion by the end of the year.
Netflix is also expanding its live-event portfolio, including a larger schedule of NFL programming, to attract viewers and generate more advertising revenue.
During a post-earnings video, Co-CEO Greg Peters said Netflix had considered offering a free, advertising-supported service in selected markets.
However, he said the company had no immediate plans to launch such an option.
Video Games Still in Early Development
Netflix is also developing its video game business as part of its broader growth strategy.
The gaming division remains at an early stage, but the company sees it as a potential way to increase engagement and strengthen the value of its subscription service.
Netflix is attempting to create a wider entertainment platform that extends beyond traditional television programmes and films.
Viewer Engagement Remains Healthy
Netflix said engagement levels remained healthy during the first half of the year.
Total viewing hours increased by 2%, compared with growth of 1.5% during the same period one year earlier.
The company believes continued investment in content, technology and personalisation will help it compete for viewers’ attention.
Netflix Expands Use of Generative AI
Netflix also said the use of generative artificial intelligence in content production was increasing rapidly.
The technology has reportedly been used in approximately 300 titles, primarily during post-production.
Netflix plans to use technology across its operations to improve content creation, recommendations, advertising and overall efficiency.
The company’s latest results suggest its core business remains profitable and resilient. However, the disappointing forecast shows that investors expect strong execution as Netflix enters a slower and more mature phase of growth.
