Netflix shares dropped in after-hours trading Thursday after the streaming giant reported lackluster results for the second quarter.
Shares, which have already fallen nearly 45% over the past year, shed 9% after the close of trading as investors processed the earnings report. It showed revenue slightly below Wall Street expectations and a narrow beat on earnings. Revenue came in at $12.56 billion, just shy of the consensus for $12.58 billion, while earnings of 80 cents a share nipped forecasts by a penny.
Despite the uptick, pressure has been mounting on Netflix in terms of its engagement metrics, with critics saying it is losing ground to YouTube, TikTok and other platforms. A recent report in Bloomberg said there was a sharper-than-usual dropoff recently between the first and second season of series.
The company appeared to acknowledge the need to regroup in its quarterly shareholder letter. “As we’ve developed an increasingly sophisticated understanding of how consumers ascribe value to our service, we know not all hours are equal,” the letter said. “Time spent is just one aspect of strong engagement – quality and variety also matter. The key is to improve across all of those dimensions: quality, variety, and quantity.”
Netflix forecasts revenue growth of 12% in the third quarter, and has narrowed its full-year revenue forecast to $51 billion to $51.4 billion. It still expects to double 2025 levels of ad revenue, hitting $3 billion.
Netflix shares have skidded to an 18-month low, down 21% in 2026 to date, as skepticism lingers about the company’s user engagement, competitive set and M&A aspirations.
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