Netflix Shares Sink 6% After Q3 Beat as Ad Revenue Guidance Cut and Q4 Outlook Disappoints

Netflix reported third-quarter revenue of $12.9 billion, up 11.8% year over year, matching its own forecast but marking the slowest revenue growth in three years. Earnings per share beat consensus by $0.05, and operating margin came in at 34.6%, up sharply from 28.2% a year earlier and ahead of guidance due to expense timing. Despite those positives, shares fell more than 6% after the results, hitting a new 52-week low, as the company's forward guidance unsettled investors.

For the fourth quarter, Netflix guided revenue of $13.44 billion, short of the Wall Street consensus of $13.51 billion. The company also trimmed its full-year 2026 revenue forecast to $51.1 billion, a figure at the bottom of its previously guided range, implying 13% annual growth. Full-year operating margin guidance was set at 31.5%.

The advertising business drew particular scrutiny. Netflix cut its 2026 ad revenue forecast to approximately $2.7 billion from a prior target of $3 billion, blaming slower-than-expected rollout of its ad-supported tier due to product and integration delays. The company still expects ad revenue to grow more than 80% in 2026 but acknowledged falling behind its initial targets. Management also declined to share view hours data during the call, while noting that broader engagement metrics including churn improvements and international growth remained healthy.

Netflix also announced a leadership change, replacing its chief content officer with Peter Rice, a former senior executive at Disney. The company said Rice would focus on improving U.S. content execution while maintaining the existing overall content strategy. The stock had already declined roughly 25% in 2026 before the earnings release, and the results extended the pressure on shares.