Netflix issues weak profit forecast after job cuts, programming shake-up
Netflix forecast fourth-quarter profit below Wall Street expectations and cut its 2026 advertising outlook, sending shares down nearly 7 per cent in after-hours trading. The streaming pioneer, which recently laid off 6 per cent of staff and replaced top programming executives, is seeking to revive g
Netflix issued a weaker-than-expected forecast for fourth-quarter profit on Tuesday, days after the streaming pioneer laid off 6 per cent of its workforce and replaced two of its top programming executives.
Shares of Netflix fell nearly 7 per cent to US$63.99 in after-hours trading. The stock had fallen more than 40 per cent in a year before the earnings report.
Third-quarter revenue rose 11.8 per cent to US$12.87 billion, in line with Wall Street forecasts, but marked the lowest rate of increase in nearly three years. The company forecast fourth-quarter net income of US$2.79 billion and earnings per share of 67 cents, below the average analyst forecast of US$3.07 billion and 73 cents.
Netflix reduced its advertising forecast for 2026 to roughly US$2.7 billion, down from about US$3 billion. Executives said in their quarterly letter to shareholders that some ad product capabilities rolled out slightly slower than expected.
The company that shook up Hollywood when it started streaming TV shows and movies two decades ago is now competing with a surge in viewership on YouTube and TikTok. Netflix has invested in video games, podcasts and live events to draw new viewers and increase the time members spend on the platform. Wall Street analysts have questioned how the company will kick-start growth.
Looking ahead, Netflix said it would continue to expand its offerings through licensing more third-party content. Beyond that, it will focus on the core service of streaming TV, film and live events and invest in original shows that "spark conversation, bring in more members and make us a 'must-have' service," executives said in the letter.
For the third quarter, earnings per share came in at 87 cents, ahead of the 82 cents average forecast of analysts surveyed by LSEG. New programming during the quarter included "Monster: The Lizzie Borden Story," the second season of "The Gentlemen," the final installment of "Outer Banks" and a reboot of "Little House on the Prairie."
Last week, Netflix laid off 1,000 people, or about 6 per cent of its employees. The company replaced Chief Creative Officer Bela Bajaria and said film chief Dan Lin was departing, signs that it is resetting its programming strategy. Earlier this year, Netflix lost a bidding war for Warner Bros Discovery and its rich library of characters, which was sold to David Ellison-led Skydance.
Netflix has posted monthly subscriber losses in the US throughout 2026, with no net additions reported for any month up to September, data from analytics firm Antenna showed. Antenna tracks US subscription purchases via sources like credit card transactions, but excludes subscriptions acquired through wholesale bundles. A Netflix spokesperson said the Antenna data were "not representative of Netflix's business performance."