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ii view: Netflix predicts fourth slower quarter in a row

Easily underperforming the Nasdaq 100 index year-to-date. Analyst Keith Bowman assesses prospects.

21st October 2026 16:51

by Keith Bowman from interactive investor

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Third-quarter results to 30 September

  • Revenue up 11.8% year-over-year to $12.87 billion (£9.6 billion)
  • Earnings per share (EPS) up to $0.87 per share (66p per share) from $0.59 a year ago 

Guidance:

  • Expects fourth-quarter revenue growth of 11.5% to $13.44 billion
  • Expects fourth-quarter earnings growth of 19% year-over-year to $0.67 per share
  • Now expects full year 2026 revenue of $51.1 billion, the low end of a previous $51-51.4 billion range

ii round-up:

Netflix Inc (NASDAQ:NFLX) detailed earnings that beat Wall Street hopes but with the global streamer predicting a fourth consecutive slowdown in quarterly sales growth.

Third-quarter earnings jumped 47% from a year ago to $0.87 per share, beating estimates of $0.82 and helped by the timing of expenses. Year-over-year quarterly sales growth of 11.8% slowed from 17.6%, 16.2% and 13.4% in the previous three quarters, with Netflix predicting growth of 11.5% for the current fourth quarter.

Shares in the Nasdaq 100 company fell 5% in US trading having come into these latest numbers down by a quarter so far in 2026. That’s similar to Sky owner Comcast Corp Class A (NASDAQ:CMCSA). The Nasdaq 100 index is up almost 17% year-to-date.

In late 2024, Netflix moved to focus on sales and profits and away from customer subscription numbers.

Expected annual revenue of $51.1 billion in 2026 is towards the lower end of management’s prior forecast, and follows a slower-than-expected rollout of ad-carrying capability services globally.

Total expected ad sales for 2026 of $2.7 billion is down from the streamer’s previous $3 billion estimate. Netflix recently announced the loss of around 1,000 jobs, or 6% of staff, with resultant costs expected to weigh on Q4 earnings. Job losses included that of the group’s chief content officer.

Broker Morgan Stanley reiterated its ‘overweight’ stance on Netflix shares post the results, but downgraded its fair value estimate to $77 per share from $80.

ii view:

Started in August 1997 sending DVDs to customers, Netflix launched its online streaming service in 2007. Headquartered in California, previously announced subscribers totalled over 320 million. Geographically, the US accounted for most revenues in 2025 at 41%, followed by the combined Europe, Middle East, and Africa (EMEA) at 32%. Latin America and Asia came next at 12% each, with Canada the 3% balance.  

For investors, competition for viewers remains intense with Alphabet Inc Class A (NASDAQ:GOOGL)'s YouTube and China’s Tik-Tok competing hard and developments such as Comcast’s move to buy part of ITV (LSE:ITV) further intensifying competition. Developments in AI could make content easier for others to create. The previous departure of founder Reed Hastings potentially sees a big driver of the group’s fortunes removed, while the lack of any dividend contrasts with forecast yields of over 1% at The Walt Disney Co (NYSE:DIS) and Comcast.  

To the upside, revenues now include both increasing subscription fees and growing advertising sales. The streamer’s growing appetite for live sport may increase its attractiveness as well as drive demand for corporate advertising. Expected free cashflow of $12 billion in 2026 supports ongoing investment, while developments in AI could increase customer content discovery and recommendations.

In all, Netflix’s established strong viewing engagement and the ongoing move from linear TV to streaming should continue to assist this US media giant. However, the shares have lost half their value since summer 2025 and trade at prices not seen in over two years. Intense competition for eyeballs offers caution until there are signs the selling is over. 

Positives:

  • Push towards showing live sports
  • Geographical diversity

Negatives:

The average rating of stock market analysts:

Buy

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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