Key Takeaways
- Netflix shares fell 3% today after Bloomberg reported that its users are watching less and opening the app on fewer days a month than a couple of years ago.
- The report backs up what co-CEO Greg Peters admitted on the third-quarter call, that U.S. engagement needs to get better.
- View hours grew 2% in the first half of 2026 while revenue grew 11.8% in the third quarter, so price increases and ads are doing the work.
- The stock trades far below its five-year average forward multiple, and January’s 2027 guidance is the next test.
Netflix (NFLX) fell 3% today, even as the broader market rose, after Bloomberg’s Lucas Shaw reported on Sunday that Netflix’s users are watching less than they used to.
That caps a rough week. Netflix cut its 2026 ad forecast and guided fourth-quarter earnings below expectations last Tuesday. Then on Thursday, Wolfe Research downgraded the stock to Peer Perform from Outperform, saying its engagement isn’t responding to higher investment.
What exactly happened
Citing people familiar with the matter, Bloomberg reported:
- Customers are opening the app on fewer days a month than they did a couple of years ago.
- Total watch time rose a couple of percentage points in the first half of 2026 only because Netflix added members. Each member is watching less.
- The decline has been modest, with no mass cancellations.
Management hinted at this on the third-quarter call. Co-CEO Greg Peters said: “Our engagement is solid… but we know that we can do better. And that better is our upside.”
Meanwhile, YouTube took a record 14.2% of U.S. TV time in July, according to Nielsen, against 7.8% for Netflix.
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Price is doing the heavy lifting
Netflix’s view hours grew 2% in the first half of 2026, while revenue grew 11.8% in the third quarter. Price increases and ads make up the gap: U.S. and Canada revenue grew 11%, inside the 8% to 13% range of March’s U.S. price increases.
So far, members are paying up: churn improved year over year in the third quarter, globally and in the U.S. But a higher price is easier to swallow when you’re watching more, and analysts still expect double-digit growth.
With 2026 nearly done, 2027 is the year at risk. The $56.6 billion consensus means about 11% growth from members who are watching less.
The price already assumes a lot
Netflix is down nearly 30% in 2026 (through Friday’s close) and trades at about 18x forward earnings, near the bottom of its five-year range.
That’s against a five-year average of 33x, and not far above its 16x low in May 2022.
My take: the engagement problem is real, but at this multiple the stock already prices in plenty of it. The bigger risk is that estimates keep falling, and Netflix’s 2027 guidance in January will settle that. A revenue guide below 10% growth would mean the viewing slide has reached the top line.
So what is Netflix stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
