Netflix hunts for its next big hit after US$135b stock market wipeout
The stock is down 26% in 2026, putting it on track for its worst year since 2022.
Netflix faces an uphill battle to regain its lost value after a $135 billion stock market wipeout in 2026, with user engagement stalling due to a lack of popular content. Despite heavy spending in the competitive entertainment landscape, the streaming giant has seen a 26% decline in stock value, ranking among the worst performers in the technology-heavy Nasdaq 100 Index.
Co-CEO Ted Sarandos attributes the issue to content costs and intense competition, forcing Netflix to take action. The company announced that Dan Lin, head of film division, will leave, and replaced chief content officer Bela Bajaria with Peter Rice. Additionally, Netflix plans to cut about 1,000 positions globally to reduce costs.
However, these moves will not appear in the upcoming earnings report, as they are expected to be implemented in the fourth quarter. Analysts predict a 12% revenue rise in Q3 2026, with earnings increasing by 39% to $0.82 per share. Gross margin is expected to be 51%, down slightly from the previous quarter. Despite the skepticism surrounding engagement improvements, Wedbush's Alicia Reese acknowledges that the company is taking steps to address both engagement issues and content spending, with ad revenue projected to double to $3 billion in 2026.
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