Netflix issues weak fourth-quarter forecast, shares drop
Third-quarter revenue rose 11.8% to $12.87 billion, in line with Wall Street forecasts, but the lowest rate of increase in nearly three years. The company forecast fourth-quarter net income of $2.79 billion and EPS of 67 cents, below the average analyst forecast of $3.07 billion and 73 cents.
Netflix has issued a weaker-than-expected forecast for its fourth-quarter profit, causing its shares to drop more than 5% in after-hours trading. The company reported a third-quarter revenue increase of 11.8% to $12.87 billion, but this was the lowest rate of growth in nearly three years. Netflix's earnings per share for the quarter were $0.87, below the average analyst forecast of $0.73.
The company had previously laid off 6% of its workforce and replaced two top executives in the programming department. Netflix has reduced its advertising forecast for 2026 to about $2.7 billion, down from $3 billion. The company is now competing with growing viewer numbers on YouTube and TikTok, having invested in various ventures including video games, podcasts, and live events.
Wall Street analysts have raised concerns about Netflix's growth strategy, suggesting it should refocus on its core streaming services and compelling original content. Netflix plans to continue expanding its offerings through licensing more third-party content while prioritizing streaming TV, film, and live events, as well as investing in original shows to attract and retain subscribers.
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