Netflix shares tumbled 11% in after-hours trading Thursday after the streaming giant reported second-quarter revenue of $12.56 billion, falling short of Wall Street expectations. The company’s third-quarter guidance of $12.86 billion also missed analysts’ consensus estimate of $13 billion, raising fresh concerns about subscriber growth and pricing power.
Revenue miss and guidance shortfall
The Q2 figure came in below the $12.7 billion that analysts had penciled in, according to data compiled by Bloomberg. Netflix attributed the shortfall to a stronger-than-expected U.S. dollar and slower ad-tier adoption in some international markets. The company did not provide a specific subscriber number for the quarter, but said paid net additions were “modestly below” its own internal forecast.
For the current quarter, Netflix projected revenue of $12.86 billion, well under the $13 billion consensus. The guidance implies year-over-year growth of about 12%, a deceleration from the 16% pace seen in the first half of 2026. The company cited ongoing currency headwinds and a “more cautious” consumer spending environment in parts of Europe and Latin America.
Investor reaction and market context
The after-hours selloff erased roughly $18 billion in market value, pushing Netflix shares below $480. The stock had gained nearly 30% year-to-date before the earnings release, buoyed by optimism around the company’s ad-supported tier and password-sharing crackdown. Thursday’s drop wiped out most of those gains.
Trading volume spiked to more than triple the 30-day average in the first hour after the earnings release. Several sell-side analysts cut their price targets, though none downgraded the stock outright. The broader tech-heavy Nasdaq Composite was flat in regular trading Thursday.
What’s next for the streaming giant
Netflix faces a critical test in the second half of 2024 as it rolls out its ad-supported tier in additional markets and begins to phase out the basic ad-free plan in the U.S. and Canada. The company has said it expects ad revenue to become a meaningful growth driver by 2027, but the Q3 guidance suggests the transition is taking longer than anticipated.
Investors will be watching Netflix’s next quarterly report, due in October, for signs that the ad business is gaining traction. The company also faces renewed competition from Disney+, which recently reported a surprise subscriber gain, and from Warner Bros. Discovery’s Max, which is bundling with Amazon Prime in select markets.
Netflix executives are scheduled to speak at a Morgan Stanley investor conference in San Francisco next week. The company has not announced any changes to its full-year 2026 revenue or operating margin targets.
