Key Takeaways
- Netflix trades near a two-year low after its third-quarter report cut its 2026 ad revenue forecast to about $2.7 billion from about $3 billion.
- Third-quarter revenue grew 11.8% to $12.87 billion, the slowest growth in nearly three years, while operating margin jumped to 34.6% from 28.2%.
- Netflix bought back a record $4.8 billion of stock, but its fourth-quarter EPS guide of $0.67 missed the $0.73 analysts expected.
- The Thanksgiving Eve NFL game and the January report will show whether live events and ads can push growth back above 12%.
Netflix (NFLX) is still printing cash. Right now, the market barely cares.
The stock sits near a two-year low three weeks after its third-quarter report. That report cut the 2026 ad revenue forecast to about $2.7 billion from about $3 billion, and shares fell more than 5% after hours.
Rivals are part of the worry. Co-CEO Ted Sarandos has called YouTube, owned by Alphabet (GOOGL), a direct competitor for the TV screen. Meanwhile, Walt Disney (DIS) just licensed current and library titles to Netflix, including all five Ice Age films.
Ads fell behind plan
Revenue rose 11.8% to $12.87 billion, the slowest growth in nearly three years. Still, EPS of $0.87 beat the $0.82 consensus, and operating margin jumped to 34.6% from 28.2%.
The guidance did the damage:
- Fourth-quarter revenue of $13.44 billion, up 11.5%
- Fourth-quarter EPS of $0.67, below the $0.73 analysts expected
- 2026 ad revenue of about $2.7 billion, down from roughly $3 billion
Netflix blamed a slower rollout of some ad product features. “We are currently a bit behind our aggressive target for the year,” co-CEO Greg Peters said in the earnings interview.
The slowdown has been building all year.
Growth has slowed in each quarter since hitting 17.6% in late 2025. Even before the report, Sarandos admitted Netflix “is not growing as fast as I want us to.”
The cash engine still runs
The ad cut itself is small. At $300 million, it equals less than 1% of the $51.1 billion Netflix expects in 2026 revenue, and subscription revenue beat the company’s plan.
Profit is the better story. Operating income rose 37% to $4.46 billion, and Netflix still targets a 31.5% operating margin for 2026, up from 29.5%. Free cash flow grew 8.4% to $2.88 billion in the quarter.
So where is all that cash going?
Netflix bought back 63.9 million shares for $4.8 billion, its largest quarterly repurchase ever. Diluted shares fell 3.3% from a year earlier, and $22.3 billion of authorization remains.
Ads also get more room in 2027, when the ad tier reaches 15 new countries starting in March.
TIKR tracks 52 analysts on Netflix. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Netflix, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Netflix’s Analyst Ratings
Engagement is the real test
Competition sharpens the engagement question. Sarandos has said about 55% of YouTube engagement now happens on TV sets, and Netflix will soon publish viewing data just once a year.
Near-term margins dip, too. The 26.0% fourth-quarter operating margin guide includes a 120 basis point hit from roughly 1,000 job cuts. Netflix also trimmed its 2026 free cash flow outlook to about $12.0 billion from $12.5 billion, mainly because of a real estate deal.
The valuation already reflects much of that…
The forward multiple sits far below its mid-2025 peak, so investors are pricing in growth that keeps fading.
My take: Netflix looks cheap for a company guiding 13% revenue growth and a 31.5% margin this year. Yet I doubt the stock re-rates until ads and live events push growth back above 12%. The record buyback supports the shares, but it can’t fix engagement.
The next checkpoint is Netflix’s biggest live quarter yet: the NFL’s first Thanksgiving Eve game, a Christmas Day doubleheader and the Tyson Fury vs. Anthony Joshua fight. The January report will then show whether that slate moved ad revenue, and what 2027 growth looks like.
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 stocks mentioned. Thank you for reading, and happy investing!
