Netflix shares drop after forecasting slowing sales growth

The streaming giant's co-chief executives Greg Peters and Ted Sarandos are discussing new tactics to attract subscribers

The company on Thursday projected revenue of US$12.9 billion in the current quarter and earnings of 82 cents a share, both a little shy of analysts’ expectations. Shares fell about 9.5 per cent in premarket trading on Friday, compounding the company’s recent struggles on Wall Street. If the decline holds, the stock is set to hit its lowest intraday level since Sept. 2024.

Netflix stock has dropped more than 40 per cent over the last year, as the company’s pursuit of Warner Bros. Discovery Inc. and subsequent financial results caused investors to worry that the leader in streaming has lost momentum. While Netflix still has more subscribers and viewership than any other paid streaming service, its growth in sales has slowed. Netflix endured a months-long drought of new hits in the first half of the year, during which many returning shows struggled to retain viewers in the new seasons.

The company sought to reassure restive investors by outlining a plan to sustain growth in the coming years and touting recent hits such as I Will Find You, an adaptation of a Harlan Coben novel, which was Netflix’s most-viewed new original series this year. The company reported second quarter sales of US$12.6 billion and earnings of 80 cents a share, in line with Wall Street’s consensus. “We don’t manage the business on a quarter-to-quarter basis,” chief financial officer Spencer Neumann said on a call with analysts.

Netflix has only reached about 45 per cent of its addressable market and accounts for just five per cent of global TV viewing, he said. The company will add US$6 billion in sales this year. Netflix is investing in new kinds of programming, such as live sports and video podcasts.

Podcasts are attracting more viewers during the day and on mobile devices while live programming has helped bring in a lot of customers relative to its actual share of viewing, the company said. Netflix has announced a flurry of new deals with popular social media personalities in recent weeks, including YouTube stars Alan Chikin Chow and Nick DiGiovanni, and just rolled out a partnership with French broadcaster TF1. The company’s total spending on programming will grow about 10 per cent this year, slightly more than the average of the past few years.

The company also touted its use of generative artificial intelligence on about 300 shows. The amount of time people spend on Netflix grew two per cent in the first half of 2026, a slight improvement over a year ago. The company said that was good, especially given the competition from the World Cup and Winter Olympics, which aired on other networks.

Yet Netflix also said it will now release its What We Watched report on show viewership annually, rather than twice a year. No other streaming service has matched Netflix’s viewership disclosure and the company now feels that recent reporting about slowing engagement has done more harm than good. The changes in reporting could also be fuelling investor concerns.

“When subscriber growth became a less reliable story, Netflix stopped reporting quarterly membership numbers,” said Mike Proulx, research director at Forrester. “Now, as engagement faces more scrutiny, the company is reducing the frequency of that report. Netflix says engagement is healthy.

If that’s true, investors should want more visibility into it, not less.” Netflix co-chief executives Greg Peters and Ted Sarandos are discussing new tactics to attract subscribers, such as free trials in select markets. They have also talked about a free, ad-supported offering at some point, though the company has no immediate plans.

“A free offering could make sense in some markets, but we have to be thoughtful about cannibalization of paid tiers,” Peters said on the call. —With assistance from Subrat Patnaik.