Netflix stock drops over 7% after third-quarter revenue forecast misses expectations
Netflix reported a 13% increase in revenue and an 8.8% rise in profit for the second quarter of 2026, driven by the success of its crime series "I Will Find You" and the animated film "Swapped." However, the company's forecast for the third quarter fell short of Wall Street's expectations, causing its stock to drop by over 7% in after-hours trading.
The world's largest streaming service reported revenue of $12.56 billion for the second quarter, up from $11.01 billion a year earlier. Profit rose to $3.4 billion from $3.13 billion in the same period last year. Earnings per share were $0.80, slightly above the $0.79 expected by analysts.
Despite the strong financial performance, Netflix's stock fell sharply after the company forecast third-quarter revenue of $12.86 billion, below the $13 billion expected by analysts. The company also projected a profit of $0.82 per share for the current quarter.
Netflix's management stated in a letter to shareholders that their financial development remains solid and they are on track to meet their annual goals. The company narrowed its full-year revenue forecast to a range of $51 billion to $51.4 billion, from a previous range of $50.7 billion to $51.7 billion.
The company highlighted the success of its live events, including the Women's World Cup, and its advertising business, which is expected to bring in about $3 billion in revenue this year. Netflix also mentioned strong interest in its live events offerings and the use of large language models to improve content discovery for subscribers.
Popular content in the second quarter included "I Will Find You," "Legends" from the U.K., "The Polygamist" from South Africa, and the K-drama "Teach You a Lesson." The animated film "Swapped" is on track to become Netflix's second-most viewed original animated movie, behind last year's "KPop Demon Hunters."
Netflix has stopped providing regular updates on subscriber numbers, instead focusing on financial metrics and engagement data. The company reported that subscribers spent over 97 billion hours watching content in the first half of 2026, a 2% increase from the previous year.
The company's stock has lost more than 40% of its value in the past few months, partly due to concerns about declining viewer numbers for some of its popular series and the failed attempt to acquire Warner Bros. Discovery.
Netflix is also exploring new content formats, including video podcasts and cloud-based TV games, to expand its offerings and attract more subscribers.
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