Netflix (NFLX) Stock Sinks 6% Even After an Earnings Beat. Here’s Why

TLDR

• Netflix (NFLX) closed Tuesday at $68.69, down 1.66%, then fell about 6% in extended trading to $64.69.
• Q3 EPS was 87 cents versus 82 cents expected, and revenue of $12.87 billion matched estimates.
• Q4 revenue guidance of $13.44 billion came in below the $13.51 billion consensus.
• Netflix cut its 2026 ad revenue forecast to about $2.7 billion from $3 billion.
• The stock is down roughly 48% from its June 2025 record high and about 25% this year.

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Netflix (NFLX) stock closed Tuesday at $68.69, down 1.66%. It then fell about 6% in extended trading to $64.69 after the company reported earnings.

Netflix, Inc., NFLX

The streamer beat on profit but gave a fourth-quarter revenue outlook that fell short. Investors did not wait long to react.

Earnings per share came in at 87 cents, above the 82 cents analysts expected. Revenue was $12.87 billion, right in line with estimates.

NETFLIX $NFLX Q3’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $12.87B (Est. $12.87B) 🟡; +12% YoY
🔹 EPS: $0.87 (Est. $0.82) 🟢; +49% YoY
🔹 Oper Income: $4.46B (Est. $4.26B) 🟢; +37% YoY
🔹 Operating Margin: 34.6%; +640 bps YoY

FY26 Guide:
🔹 Revenue: $51.1B (Est. $51.23B) 🔴
🔹 FCF:… pic.twitter.com/wcrWUWt6KT

— Wall St Engine (@wallstengine) October 20, 2026

Revenue rose almost 12% from a year ago. Netflix credited membership growth and a price increase that took effect in March.

Net income was $3.66 billion, up from $2.55 billion a year earlier. The company said the timing of expenses helped drive that jump.

The Outlook Falls Short

Netflix expects fourth-quarter revenue of $13.44 billion, up more than 11%. Analysts were looking for $13.51 billion.

The company narrowed its 2026 revenue forecast to $51.1 billion, a 13% increase. That sits at the low end of its earlier range of $51 billion to $51.4 billion.

Wall Street had expected $51.2 billion for the year. So the new number landed a bit under consensus.

Netflix also cut its 2026 ad revenue forecast to about $2.7 billion from roughly $3 billion. It pointed to a slower rollout of some ad product capabilities.

Co-CEO Greg Peters said the ad build-out is the fastest of its kind in the industry. Still, he admitted Netflix is “a bit behind our aggressive target for the year.”

Geetha Ranganathan, a senior media analyst at Bloomberg Intelligence, said the outlook speaks to a slowing growth algorithm. She said that “spells trouble for the company.”

Engagement and Job Cuts

In its shareholder letter, Netflix acknowledged investor concern about view hours growth. It argued that engagement remains healthy.

Peters said US engagement is solid. “It’s our goal to go from very good to great,” he told analysts.

Last week, Netflix said it would cut about 6% of its staff, or roughly 1,000 jobs. It is the company’s largest reduction since 2022.

Chief Content Officer Bela Bajaria is leaving the role, and former Disney executive Peter Rice will replace her. Netflix expects the job cuts to hurt fourth-quarter operating margin by about 120 basis points.

The stock is now about 48% below its June 2025 record high and down roughly 25% this year. Overnight trading had it at $64.69, down 5.82%.