Netflix Shares Tumble 9% as Weak Forecast Deepens Growth Doubts

Netflix (NFLX) shares tumbled 9.2% in pre-market trading on Friday after the streaming giant issued another weaker-than-expected earnings and revenue forecast, fueling investor concerns about its ability to maintain growth momentum.

Disappointing Guidance

In its report on Thursday, the company projected quarterly earnings per share and revenue below Wall Street estimates for the second quarter in a row. The disappointing outlook prompted a swift reaction from the market, with at least 11 analysts lowering their price targets on the stock, according to a Reuters report.

This follows a period of strategic shifts for Netflix, which has moved beyond its traditional subscription model to include advertising tiers, live content, and price hikes to increase revenue per user. However, the latest guidance suggests these initiatives may not be enough to offset slowing growth.

Analyst Concerns and Competition

Analysts are questioning the company's long-term prospects amid intense competition. "The story lacks excitement," said Jeffrey Wlodarczak, an analyst at Pivotal Research Group. He noted that younger audiences are increasingly turning to free social media platforms like YouTube over long-form content.

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Wlodarczak suggested this trend could lead to "slower subscriber growth and attempts by the company to offset this via more aggressive price increases and investment in content." Jefferies analysts added to the bearish sentiment, pointing out that Netflix's content slate for the second half of 2026 appears weaker than the prior year's.

Valuation and Transparency

The stock's valuation remains a key consideration for investors. Netflix shares were trading at 19.92 times 12-month forward profit estimates, a significant premium compared to competitors like Walt Disney at 13.54 and Comcast at 6.57. The stock has fallen more than 44% since its all-time high in June 2025.

Concerns are also compounded by the company's reduction in data transparency. After stopping the publication of quarterly subscriber numbers in 2025, Netflix announced it will cut its detailed viewing-hours report from twice a year to annually, starting in January 2027.