Netflix Shares Fall 6% After Earnings and Ad Outlook Cut

Netflix shares fell 6% in premarket trading after the company reported mixed third-quarter earnings and lowered its full-year advertising revenue outlook to about $2.7 billion from $3 billion previously. The streaming giant faces internal hurdles that cannot be fixed immediately by workforce reductions or executive shuffles, even as competition from Alphabet’s YouTube intensifies.

The company posted earnings of $0.87 per share for the third quarter, beating Wall Street expectations of $0.82. Revenue matched analyst projections at $12.87 billion. However, Netflix projected fourth-quarter revenue of $13.44 billion, falling short of the $13.57 billion expected by Wall Street.

Executive Shifts and Talent Relations at Netflix

Netflix pushed out Bela Bajaria as chief content officer this week, replacing her with former Disney executive Peter Rice. The company also laid off 6% of its workforce. Co-CEO Ted Sarandos addressed the leadership change during an earnings call, emphasizing the need to rebuild content momentum.

Most importantly, Rob, Peter Rice understands talent relations, and in a competitive market, creative talent have choices of where they want to work, and we want Netflix to always be the place that they love to do the best work of their life. Peter is the exact right person to lead those efforts in the U.S. and around the world.

Ted Sarandos

Sarandos noted that while domestic content performance remains stable, international markets depend heavily on global blockbusters. The U.S. is also working. It’s just not growing as fast as it could or as fast as we’d like, Sarandos said on the call. We had some really solid doubles and triples this year. But the other territories count on some of those titles being home runs so that they’ll travel around the world.

Wall Street Reaction and 2027 Projections

Ahead of the third-quarter earnings release, Netflix stock had dropped 26% over the year. KeyBanc analyst Justin Patterson described the period as a transition phase for the business. 2026 has been more of a transitional year than we envisioned, Patterson said. While the latest Ads miss is frustrating, we find comfort in Membership retention that is still healthy and corrective actions within content that can drive a potential re-acceleration in 2027E and into 2028E (which we are not modeling today).