Netflix Shares Hit Two-Year Low After Ad Forecast Cut
Netflix shares fell to their lowest level since August 2024 on Wednesday, after the streaming company cut its advertising sales forecast for 2026. In premarket trading, the stock was down about 7%, to under $64 a share, according to Variety.
That leaves the shares down nearly 30% so far this year, counting from the first trading day of January.
The company reported its third-quarter results on October 20. Earnings per share came in at 87 cents, ahead of the 82 cents analysts had expected, according to CNBC. Revenue rose 12% from a year earlier, the slowest growth Netflix has posted in three years. Operating income, the profit left after running costs, rose 37%.
The sore point was advertising. Netflix now expects about $2.7 billion in ad sales for 2026, down from $3 billion, because some ad features are rolling out more slowly than planned. Its revenue forecast for the coming quarter also came in slightly below Wall Street expectations. The company still expects 2026 revenue of $51.1 billion, up 13%, according to its shareholder letter.
Netflix also made changes to its staff and leadership in the weeks around the report. It cut about 1,000 jobs, roughly 6% of its headcount, shortly before the results. The week before the earnings, content chief Bela Bajaria was dismissed, and Peter Rice is taking over the role as part of a wider overhaul of content leadership.
On the earnings call, co-CEO Ted Sarandos praised Bajaria. He also said, "I know that we could do better."
Analysts were quick to respond. New Street Research's Dan Salmon wrote in an October 20 note that investors should stay sceptical of Netflix doubling down on its core strengths while staying largely absent from short-form and mobile video, which are growing fast. Pivotal Research's Jeff Wlodarczak cut his year-end 2026 price target on the stock by $5, to $65. A price target is an analyst's estimate of where a share price could land. He lowered his subscriber forecasts and raised his programming cost forecasts.
Programming costs are what a streamer pays for the shows and films it makes or buys. Higher estimates for those costs sit directly behind the titles that viewers see on their screens.
The shareholder letter also mentioned a partnership with the games publisher Take-Two Interactive, which showed a sneak peek of Grand Theft Auto VI in August. The earnings call itself did not mention video games.
For now, the numbers that moved the market are the slower revenue growth, the smaller ad target and the leadership change. Netflix's next earnings report will show whether the ad rollout catches up.
