NEW YORK, July 20, 2026, 07:04 EDT — Nasdaq had ended its regular session, but premarket trading continued.
- Netflix shares were at $68.55 pre-market on Monday, a decline of 0.58%. The stock fell 7.26% on Friday and dropped 6.0% over the past week.
- Initial estimates indicate advertising could account for roughly 25% of Netflix’s incremental revenue in 2026, while making up just 5.9% of overall sales.
- Revenue for the third quarter is expected to rise by 11.7%, marking the slowest increase since the end of 2023.
Netflix stock slipped ahead of Monday’s open, following a sharp decline after Friday’s earnings results. Investors are weighing if advertising revenue will make up for the slowdown in subscriber increases.
Advertising figures hold more significance than their scale indicates. Netflix anticipates around $3 billion in ad revenue this year, nearly twice the amount projected for 2025. That represents 5.9% of the midpoint in its $51 billion to $51.4 billion sales outlook.
Chief Financial Officer Spence Neumann projects incremental annual revenue of around $6 billion. If ad sales nearly double, this would contribute an estimated $1.5 billion—an early calculation that accounts for 25% of the overall increase.
Still, the short-term outlook does not indicate faster growth. Revenue for the third quarter is expected to be $12.86 billion, reflecting an 11.7% annual increase. In comparison, second-quarter growth was 13.4%. This 1.7-point drop resulted in guidance lagging behind Wall Street’s $13 billion forecast.
Neumann stood by the wider perspective. “We manage to the full year,” he said. Netflix maintains its forecast for annual growth at 13% to 14%, citing strong acquisition and retention patterns.
| Company | July 17 close | Daily move | Forward P/E |
|---|---|---|---|
| Netflix NASDAQ:NFLX | $68.95 | down 7.26% | about 20.0x |
| Walt Disney NYSE:DIS | $97.67 | down 2.05% | 13.5x |
| Comcast NASDAQ:CMCSA | $23.79 | down 1.29% | 6.6x |
Netflix’s valuation premium contracted during the selloff, though it remains elevated. The stock’s forward multiple is still approximately 48% higher than Disney’s and stands at nearly triple that of Comcast.
Trading volumes reflected a reset unique to the company. On Friday, 142 million shares changed hands, more than tripling the 65-day average. Netflix shares dropped 7.26%, while the S&P 500 declined 1.01%.
Revenue for the second quarter increased to $12.56 billion. Operating margin decreased to 33.4% from 34.1% in the same period last year. Free cash flow declined 33% to $1.53 billion, in part because of higher taxes associated with a deal termination fee.
Engagement stayed positive, though growth was modest. Members viewed over 97 billion hours in the first half, a 2% increase. Starting in 2027, Netflix will release its viewing report once a year instead of twice annually.
According to PP Foresight analyst Paolo Pescatore, Netflix is now in “a steadier phase of growth.” He noted the company faces less margin for mistakes due to rising expectations. Reuters
Management contends that viewing hours fail to measure every return. Live programming is projected to make up slightly more than 5% of total content investment for the year. Although it could account for just 1% of viewing hours, six of Netflix’s top 10 sign-up days were driven by live events.
Sector updates will be released this week, with Alphabet NASDAQ:GOOGL—which owns YouTube, a rival in the streaming and digital advertising space—reporting on Wednesday. Comcast will release its results Thursday morning. These reports are expected to provide new insights into digital advertising trends and streaming business performance.
Risks: The outlook for the third quarter could signal prudence and more challenging year-over-year comparisons instead of a significant downturn. Higher advertising rates or increased demand for live events could suggest the selloff has been overdone. On the other hand, if engagement drops or consumers push back on prices, Netflix’s valuation premium may come under pressure.
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