ii view: weak Netflix guidance is food for bears
Shares in this household name have fallen by a double-digit percentage in 2026. Buy, sell, or hold?
17th July 2026 11:18
by Keith Bowman from interactive investor
Second-quarter results to 30 June
- Revenue up 13.4% year-over-year to $12.56 billion (£9.3 billion)
- Earnings per share (EPS) up 11% from a year ago to $0.80 per share (59p per share)
Guidance:
- Expects second-quarter revenues to grow 11.7% to $12.86 billion
- Expects second-quarter earnings to grow 39% year-over-year to $0.82 per share
- Now expects full year revenue of $51-51.4 billion, narrowed from a previous $50.7-51.7 billion
ii round-up:
Netflix Inc (NASDAQ:NFLX) has detailed earnings that matched Wall Street forecasts but offered forward estimates below analyst expectations.
A combination of membership growth, price increases and growing ad sales had second-quarter revenue to late June up 13.4% year-over-year to $12.56 billion (£9.3 billion). That fuelled earnings of $0.80 (59p per share), exceeding forecasts of $0.79 per share.
However, forecast third-quarter sales of $12.86 billion fell shy of analyst estimates of around $13 billion, potentially equating to currency adjusted growth of 11% versus 12% during the latest quarter.
Shares in the Nasdaq 100 company fell 9% in post-results trading having come into these latest numbers down by a fifth so far in 2026. That’s similar to Sky owner Comcast Corp Class A (NASDAQ:CMCSA). The Nasdaq 100 index is up 15% year-to-date.
Expected revenues of $51-to-51.4 billion in 2026 was narrowed from management’s previous $50.7-and-$51.7 billion estimate.
In late 2024, Netflix shifted focus away from customer subscription numbers to sales and profits. The move is now being pushed further, with Netflix planning just one report regarding customer viewing per year, starting in the first quarter of 2027. Subscribers totalled 325 million at the start of this year, up from 232 million in early 2023.
Viewing hours rose 2% in the first half of 2026 compared to growth of 1.5% in 2025. That came despite the competitive impact of the Winter Olympics and the football World Cup in 2026.
The California-headquartered company continues to expand the variety of entertainment available, with a recent move into video podcasts and an expansion of cloud TV games.
Broker Morgan Stanley reiterated its ‘overweight’ stance post the results, but downgraded its fair value estimate per share to $83 from $90.
ii view:
Started in August 1997 sending DVDs to customers, Netflix launched its online streaming service in 2007. Today, the media giant employs around 15,000 people. Geographically, the US accounted for most revenues during 2025 at 41%. That was followed by the combined Europe, the Middle East, and Africa (EMEA) at 32%, Latin America and Asia each at 12%, and Canada the balance of 3%.
For investors, competition for viewers remains intense with the likes of Alphabet Inc Class A (NASDAQ:GOOGL) business YouTube and China’s Tik-Tok competing hard. Comcast has also recently agreed to buy part of ITV. The recent stepping down of founder Reed Hastings potentially sees a big driver of the company’s fortunes sidelined. Developments in AI could make content easier for others to create, while the lack of any dividend contrasts with forecast yields of 1.5% or over at The Walt Disney Co (NYSE:DIS) and Comcast.
- SpaceX: what Wall Street thinks the shares are really worth
- 20 hottest tech stocks of the week: Kioxia, SpaceX, Micron
- Top stocks to insulate your portfolio from AI volatility
On the upside, revenue now includes both increasing subscription fees and growing ad sales. An increasing focus on live sports broadcasting may add customer attraction as well as appetite for corporate advertising. Expected free cashflow of $12.5 billion over 2026 supports ongoing investment, while developments in AI could increase customer content discovery and recommendations.
On balance, and while intense competition for eyeballs cannot be ignored, established strong viewing engagement and the ongoing global switch from linear TV to streaming will likely continue assisting this modern-day media giant.
Positives:
- Management initiatives such as advertising
- Geographical diversity
Negatives:
Intense competition from Disney, Apple Inc (NASDAQ:AAPL) and others
Subject to currency movements given overseas customer base
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.