The company had projected a slowdown in fourth-quarter revenue growth and lower ad sales for 2026 than previously expected despite posting a stronger-than-expected third quarter profit and revenue that was in-line with Wall Street’s estimates.
The latest results came days after firing Chief Content Officer Bela Bajaria, film chief Dan Lin, and 6% of its total workforce — its largest cuts since 2022. It also follows continued concerns about engagement growth, which has been exacerbated by Netflix’s failed pursuit for Warner Bros. Discovery’s studio and streaming earlier this year and increased competition from YouTube.
“Netflix remains a well-oiled, highly profitable machine, but is focused on too many unwanted distractions,” PP Foresight analyst Paolo Pescatore told TheWrap. “The company needs to get back to basics and focus on compelling content, particularly after a year without a major breakout hit. The recent layoffs signal a broader reset as management looks to cut costs, sharpen priorities and refocus the business.”
Pescatore said that great storytelling remains Netflix’s “biggest strength and the main reason subscribers keep coming back.” He added that the Disney licensing deal is a “step in the right direction,” but emphasized that the company needs to “rediscover its magic rather than chase every new opportunity.”
UBS analyst John Hodulik maintained a buy rating on Netflix stock, but cut the firm’s price target from $115 to $110 following the softer guidance and continued engagement headwinds.
However, Hodulik said that the company’s “fundamental positioning remains intact, supported by industry-leading scale, a durable competitive moat and substantial monetization runway.”
“At current levels, we see a compelling risk/reward relative to the company’s longer-term growth potential/market positioning,” Hodulik added.
Similarly, Guggenheim analyst Michael Morris maintained a buy rating on the stock, but cut the firm’s price target from $80 to $78. Morris said the firm considers a more impactful content slate “non-negotiable for renewed investor interest.” He also said there’s a “silver lining” in licensing, touting TF1’s incremental reviewing in France and Disney’s five “Ice Age” films reaching Netflix’s global weekly top 10.
“Netflix is a top platform for licensed product, and in our view more win-win partnerships with underexposed content at attractive terms would be incremental,” Morris added. “Bundling with most other major streamers or launching a free service in the US would not sustainably bolster top-line growth.”
Seaport Research analyst David Joyce cut the firm’s price target from $90 to $85 due to the “delayed gratification” on advertising growth, but said Netflix is still a “nice house on a competitive block” and reiterated a buy rating due to ongoing double-digit revenue growth opportunities, margin expansion and free cash flow-driven capital returns.
Jefferies analyst John Colantuoni said the quarter’s results are “unlikely to be thesis changing” and maintained a buy rating with a $85 price target. He also expects investor sentiment to remain muted until viewing hours inflect.
“While we expect bears to highlight the slight revenue guide-down on advertising, we were encouraged to hear that trends in membership and pricing remain healthy,” Colantuoni continued. “We continue to see a bullish story crystallizing for ’27, as easier engagement comps and potential clarity on M&A help drive multiple appreciation.”
Deutsche Bank analyst Bryan Kraft, who has a buy rating and $93 price target, said Netflix’s earnings report didn’t reveal any incremental negative news other than the operational delay for some elements of its advertising strategy.
He added that management’s commentary on churn, international viewing, new content leadership and long-term growth were “pretty encouraging.”
“We believe the market’s reaction was overly punitive, although directionally fair given the guidance cut,” Kraft said.
While acknolwedging a slower than expected ad product rollout, William Blair analyst Ralph Shackart maintained an outperform rating on Netflix stock, noting that the underlying subscription business remains healthy, operating margins continue to expand and management is returning “significant capital” to shareholders.
“Unfortunately, this quarter did not give the bears a reason to pull back on their growth concerns” Shackart continued. “Debate will likely continue regarding the lack of content hits, layoffs, senior management changes, and increasing questions about the company’s content strategy.”
Shackart said the issues are addressable, but that Netflix needs to demonstrate it can still produce some hits to prove to investors that its content strategy remains on track.
“While it may take patience, we believe investors should benefit from accumulating shares on the pullback, recognizing that there is not a near-term catalyst,” he added. “We believe the company will solve its near-term content concern at some point in 2027.”
TD Cowen analyst John Blackledge, who maintained a buy rating with a price target of $100, agreed it could take several quarters to seethe benefit of Netflix’s strategic changes, but touted new content chief Peter Rice’s wealth of expertise across TV and film.
“The long-term opportunity remains significant, in our view, particularly given NFLX’s multi-year lead in building out a global streaming platform supported by owned originals and local language content at scale, alongside the ramping Live content and new content verticals, which should bolster the burgeoning ad tier,” Blackledge said.
Netflix shares are down 46% in the past year and 27% in the past six months.
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