NEW YORK, July 17, 2026, 12:25 EDT
- Shares last traded at $68.95, down 7.3%, at 12:09 p.m. EDT.
- Third-quarter revenue and EPS forecasts narrowly missed LSEG consensus.
- Second-quarter buybacks reached $4.71 billion, or 3.1 times free cash flow.
Netflix shares fell 7.3% on Friday after a below-consensus third-quarter forecast. U.S. cash trading remained open at the dateline.
The miss was small. The market response was not.
The figures point to a tougher investor test. Buybacks are lifting per-share results while revenue growth slows.
Netflix forecast third-quarter revenue of $12.86 billion and diluted EPS of 82 cents. Analysts expected $13 billion and 84 cents, according to LSEG. Revenue growth would slow to 11.7%, from 13.4% in the second quarter.
Capital returns sharpened that tension. Netflix repurchased $4.71 billion of shares during the quarter. Quarterly free cash flow was $1.53 billion.
That made buybacks 3.1 times free cash flow. Cash, equivalents and restricted cash fell $3.16 billion. The remaining $27.1 billion authorization equaled about 9% of midday market value.
The quarter’s mix shows where per-share support came from:
| Metric | Q2 2025 | Q2 2026 | Change |
|---|---|---|---|
| Revenue ($bn) | 11.08 | 12.56 | +13.4% |
| Net income ($bn) | 3.13 | 3.40 | +8.8% |
| Weighted diluted shares (bn) | 4.349 | 4.261 | -2.0% |
| Diluted EPS ($) | 0.72 | 0.80 | +11.1% |
| Free cash flow ($bn) | 2.27 | 1.53 | -32.7% |
| Share repurchases ($bn) | 1.65 | 4.71 | +185.0% |
| Buybacks/free cash flow | 0.73x | 3.09x | — |
Figures are company-reported. Changes are calculated from unrounded results.
The weighted diluted share count fell 2.0% year on year. EPS rose 11.1%, while net income gained 8.8%. By calculation, the lower share count added roughly two percentage points to EPS growth.
CFO Spence Neumann defended the policy. He called Q2 the “largest quarter of share repurchase in our history.” Netflix still expects about $12.5 billion of full-year free cash flow.
Investors also lost a frequent visibility marker. First-half viewing exceeded 97 billion hours and rose 2%. Netflix will publish the report only annually from 2027.
“Whenever you take away a data point from investors … you will get punished by the market,” said Ben Barringer, Quilter Cheviot’s head of technology research. Reuters
Valuation keeps the bar high. Netflix still traded near 20 times forward earnings. Walt Disney NYSE:DIS stood at 13.5 times. Comcast NASDAQ:CMCSA stood at 6.6 times.
The broader market decline was less severe. At 10:10 a.m. EDT, the S&P 500 fell 0.6% to 7,490.05. The Nasdaq Composite lost 1.3% to 25,558.15.
At least 18 analysts cut Netflix price targets after the report. The median target still sat about 40% above Thursday’s close.
Risks: Netflix must execute against its roughly $3 billion advertising target. Pricing-related churn and renewed weakness in viewing would add pressure. Stronger content or faster ad sales could support a rebound.
Netflix kept 2026 revenue guidance at $51.0 billion to $51.4 billion. It also retained a 31.5% operating-margin target. Buybacks can support the denominator. They cannot replace faster revenue growth.
