Netflix shares fall as weak forecast clouds growth outlook

Netflix shares dropped more than 8% after the company forecast third-quarter revenue and earnings below Wall Street expectations, intensifying questions about how it will sustain growth amid tougher competition. The streaming firm projected third-quarter revenue of $12.86 billion and diluted earnings per share of 82 cents, versus analyst estimates of $13 billion and 84 cents, according to LSEG. It also said it will reduce the frequency of its “viewing-hours” reports from twice yearly to once annually starting in January 2027, and noted it stopped reporting quarterly subscriber numbers in 2025. Results for the recently ended quarter showed revenue of $12.56 billion and EPS of 80 cents. Netflix reiterated that advertising revenue should reach $3 billion by year-end and said it is considering a free, ad-supported tier in some markets but has no immediate plans. Co-CEO Greg Peters said generative AI is used across about 300 titles, mainly in post-production.