Netflix posts higher Q3 profit but revenue growth worries pull shares
lower
[October 21, 2026] By
BARBARA ORTUTAY and MICHELLE CHAPMAN
Netflix, which announced layoff plans last week, posted a third-quarter
profit above Wall Street's expectations, but investors sent shares down
after the streaming company lowered its ad sales guidance, prompting
worries about slowing revenue growth.
Netflix said Tuesday it earned $3.66 billion, or 87 cents per share, for
the July-September period. That's up 44% from $2.55 billion, or 59 cents
per share, a year earlier.
Revenue rose 12% to $12.87 billion from $11.51 billion.
Analysts surveyed by FactSet predicted earnings of 82 cents per share on
revenue of $12.87 billion.
“With Netflix under pressure to find alternative lines of revenue beyond
subscriptions, it’s concerning that the company lowered its estimate for
its ad business,” said Emarketer senior analyst Ross Benes. “Revamping
content strategy is not enough to fix this challenge but it is a
worthwhile start. Guidance is not as aggressive as investors have grown
accustomed to.”
Last week, the Los Gatos, California-based company announced that it
plans to lay off about 6% of its workforce, amounting to nearly 1,000
positions, as the company makes wider “organizational changes.” At the
end of 2025, per regulatory filings, Netflix had about 16,000 full-time
employees worldwide. The most recent layoff announcement marks the
biggest round of cuts that the company has rolled out in years.
Netflix also announced last week that Chief Content Officer Bela Bajaria
will be replaced by Peter Rice. Bajaria was with Netflix for nearly a
decade. Rice will lead Netflix’s global content organization, overseeing
scripted and unscripted series, film, live events and more across all
regions. He takes over the post on Oct. 26.
While Netflix has benefited from membership sign-ups and price
increases, the company is dealing with intense competition in the
streaming sector from companies such as Amazon’s Prime Video and
Disney+. There's also Skydance, after Paramount’s $81 billion buyout of
Warner Bros. Discovery put HBO Max and Paramount+ under the same roof.
Netflix walked away from its offer to buy Warner Bros. Discovery’s
studio and streaming business in February.
[to top of second column] |
The Netflix logo is displayed on the company's website on Feb. 2,
2023, in New York. (AP Photo/Richard Drew, File)
 The company is also competing for
people's attention with YouTube and TikTok, where short videos are
extremely popular.
For the current quarter, Netflix is forecasting revenue of $13.4
billion, slightly below analysts' expectations of $13.5 billion. New
shows and movies coming this quarter include “East of Eden” and
season four of “The Diplomat” as well as the sixth and final season
of “Emily in Paris.”
Netflix also released “La Bola Negra,” a Spanish film about the
interconnected lives of three gay men across a history that spans
the early 20th century, the Spanish Civil War and the modern day.
“La Bola Negra” — which cost $15 million to make — is expected to
challenge “The Odyssey” for best picture. Netflix disclosed box
office numbers for the movie, for the first time in its history. It
made $313,391 over the weekend through Monday with a release in just
four theaters.
Shares of Netflix fell $2.79, or 4.1%, to $65.90 in after-hours
trading after the results came out.
As of Tuesday's close, Netflix's stock is down about 25% for the
year to date. Analysts see several factors contributing to its
difficulties.
“Investors are concerned about soft engagement trends, decelerating
revenue growth, a slower margin expansion outlook, and most recently
content executive leadership changes,” said John Belton, portfolio
manager at Gabelli Funds.
—-
AP Film Writer Lindsey Bahr contributed to this story.
All contents © copyright 2026 Associated Press. All rights reserved
 |
