Netflix shares fell about 7% to $68.95 on Friday after the company reported second-quarter results that showed revenue growth slowing for a third consecutive quarter. Revenue rose 13% year over year to $12.6 billion, matching management's forecast, while operating income increased 11% to $4.2 billion and earnings per share climbed 11% to $0.80. Management expects revenue growth to decelerate further to about 12% in the third quarter, extending a trend from 17.6% in the fourth quarter of 2025 and 16.2% in the first quarter of 2026. The stock has lost more than 40% over the past year and now trades at about 22 times trailing earnings, though that multiple is flattered by a one-time $2.8 billion termination fee, putting the forward price-to-earnings ratio closer to 20. The company maintained its full-year 2026 revenue forecast of $51.0 billion to $51.4 billion and an operating margin target of 31.5%, while repurchasing a record $4.7 billion of its stock in the quarter.
Netflix IncRevenue growth decelerated for third straight quarter and management expects further deceleration, causing stock to drop 7%.