Netflix shares fell 6% in premarket trading on Wednesday after the company lowered its full-year advertising forecast and issued a modest fourth-quarter profit outlook, adding to concerns about slower viewership and revenue growth.
The slide follows Netflix announcing a leadership restructuring and a 6% workforce cut earlier this month.
Co-CEO Ted Sarandos told investors that the company plans to focus on its core TV production business, and the recent executive shakeup was a step toward that goal. “It’s really important to remember, roughly 95% of our spend and nearly all of our revenue is focused on that core where we see a long runway for future growth… we keep our focus and our investment in those areas, very tight because the core is the critical growth engine,” he said.
“Our ads business has delivered really impressive growth since we’ve launched, and we do see a long road of continued growth ahead of us,” co-CEO Greg Peters said on the call. “We set big growth targets for our ads business this year. We established an aggressive product road map that was consistent with that strategy. And, just note, I think that the build-out that we’ve been on is the fastest build-out of a comparable ad stack in our industry, but we are currently a bit behind our aggressive target for the year.”
In its earnings release, the company stated: “In Q4, we expect revenue of $13.4 billion, which represents year over year growth of 12% (or 11% F/X neutral) driven by growth in memberships, pricing, and ad revenue.”
Netflix now expects 2026 ad revenue of about $2.7 billion, down from the roughly $3 billion it previously forecast. The company said the lower guidance reflects a slower-than-expected rollout of some ad product capabilities.
Netflix also announced new features for advertisers that it says will help them “better connect” brands with the right audiences and measure ad impact.
Netflix stock has declined more than 26% this year.
Read our exclusive editorial on Netflix Co-CEO, Reed Hastings
By CEO NA Editorial Staff
