TLDR
- Netflix Q2 revenue came in at $12.56 billion, just below the $12.58 billion analyst estimate
- Adjusted EPS of $0.80 beat estimates of $0.79, but Q3 guidance fell short on both revenue and earnings
- Netflix stock fell 9.4% to $67.34 in pre-market trading after the results
- Netflix is shifting its biannual engagement report to annual starting in 2027, raising investor concern
- Goldman Sachs cut its price target from $110 to $94, while keeping a Buy rating
Netflix posted a Q2 earnings beat on the bottom line, but it wasn’t enough to satisfy Wall Street.
NETFLIX $NFLX Q2’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $12.56B (Est. $12.59B) 🔴; +13% YoY
🔹 EPS: $0.80 (Est. $0.79) 🟢; +11% YoY
🔹 Oper Margin: 33.4%; -70 bps YoY
🔹 FCF: $1.53B (Est. $2.72B) 🔴; -33% YoYQ3’26 Guide:
🔹 Revenue: $12.86B (Est. $13.01B) 🔴; +12% YoY
🔹 EPS:… pic.twitter.com/WlFM9OuaWN— Wall St Engine (@wallstengine) July 16, 2026
The company reported adjusted EPS of $0.80 for the second quarter, edging past the $0.79 estimate. Revenue of $12.56 billion, however, fell short of the $12.58 billion analysts had penciled in.
The stock dropped 9.4% to $67.34 ahead of Friday’s open. Netflix is now down 21% for the year.
Q3 guidance added to the pressure. Netflix forecast earnings of $0.82 per share on revenue of $12.86 billion, missing Wall Street’s expectations of $0.84 and $13 billion, respectively.
For full-year 2026, Netflix narrowed its revenue guidance to a range of $51 billion to $51.4 billion, tightening from the previous range of $50.7 billion to $51.7 billion.
Engagement Report Change Raises Eyebrows
One move that caught investors off guard: Netflix said it will shift its “What We Watched” engagement report from twice a year to once a year, starting in 2027.
The company framed it as an effort to give a clearer picture of engagement quality and variety, not just view hours. But the timing didn’t help.
Forrester VP and Research Director Mike Proulx was blunt: “As engagement faces more scrutiny, the company is reducing the frequency of that report. Netflix says engagement is healthy. If that’s true, investors should want more visibility into it, not less.”
Netflix is dealing with pressure on multiple fronts. Competing streaming platforms are consolidating — the Paramount Skydance and Warner Bros. Discovery mergers are both in motion. On top of that, TikTok and YouTube continue pulling viewing time away from longer-form content.
Goldman Sachs Cuts Price Target
Goldman Sachs lowered its Netflix price target from $110 to $94, while holding its Buy rating.
The firm cited confidence in user and member growth, pricing power, and a growing ad-supported revenue stream. Goldman also pointed to Netflix’s content strategy across TV, film, and returning IP as a continued strength.
The new target values Netflix at roughly 25 times Goldman’s 2027 GAAP EPS estimate and 20 times its 2028 estimate, against a projected three-year GAAP EPS compound annual growth rate of around 22.5% from 2025 to 2028.
Bernstein SocGen Group also trimmed its price target, moving from $100 to $95, while keeping an Outperform rating. The firm noted that the UCAN region missed revenue expectations, though lower content amortization costs helped cushion the earnings number.
Netflix currently trades at a P/E ratio of 23.9 with a PEG ratio of 0.5. The stock hit a 52-week low of $70.86 and was trading at $74.35 before the post-earnings drop.
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