Key takeaways
- Netflix stock fell approximately 23% in 2026
- Netflix also announced around 1,000 layoffs and major leadership changes, raising questions about its content strategy and ability to sustain audience growth
- Netflix's Q3 earnings report could trigger significant stock volatility
Netflix stock is facing mounting pressure ahead of the streaming giant's third-quarter earnings report. Shares are down approximately 23% in 2026 as investors question the company's growth prospects after major layoffs and leadership changes.
The stock closed at $69.85 on Monday, after declining 0.96% during the session. Shares have also fallen more than 40% from their 52-week high.
Netflix Earnings Could Trigger Major Stock Price Move
Netflix is scheduled to release its third-quarter financial results after Tuesday's closing bell. Wall Street is expecting revenue of approximately $12.87 billion, which represents nearly 12% year-over-year growth.
Analysts also anticipate earnings of $0.82 per share, while the company previously projected an operating margin of 33.2%, compared with 28.2% during the same period last year.
Despite expectations for revenue growth, investors appear concerned about Netflix's ability to maintain its momentum. Options market data suggests traders are preparing for a potential 9% move in either direction after the announcement, which raises the possibility of volatility in Netflix shares.
The results could prove particularly important as the stock heads toward one of its weakest annual performances since 2022.
Netflix Layoffs and Leadership Shake-Up Raise Questions
Adding to investor uncertainty is the fact that Netflix recently eliminated approximately 1,000 jobs, or around 6% of its global workforce.
The restructuring also involved major changes to the company's content leadership, including the departure of chief content officer Bela Bajaria, who is being replaced by former Disney executive Peter Rice. Netflix film chief Dan Lin also departed.
The changes come as Netflix is facing serious competition from traditional streaming rivals and free video platforms like YouTube.
Although Netflix still generates impressive revenue, concerns have popped up about whether its content investments are really producing enough breakout hits to sustain audience growth.
Wall Street Watches Netflix Advertising Growth
One potential bright spot is Netflix's expanding advertising business. In fact, the company is targeting approximately $3 billion in advertising revenue for 2026. Strong advertiser commitments and higher subscription prices could help support revenue growth, even as engagement challenges persist.
However, analysts are still divided over the stock's outlook. Morgan Stanley recently reduced its price target to $80 while maintaining an overweight rating.
Investors will now be watching management's fourth-quarter guidance, advertising performance and plans to improve viewer engagement.
