Things have gone from bad to worse for Netflix (NFLX) stock over the last year. NFLX stock fell sharply on July 17 after markets gave a thumbs down to the company's second-quarter report. While earnings were broadly in line with estimates, Netflix's Q3 guidance spooked markets.
Notably, NFLX stock also plunged following the Q1 confessional earlier this year for pretty much the same reasons. That quarter, earnings easily beat estimates, but management still did not raise the annual guidance, which was seen as a sign of a slowdown in the coming quarters. In the Q2 release, management narrowed its annual revenue guidance to a range of $51 billion to $51.4 billion, increasing the lower end by $300 million while also cutting the top end of the range by a similar amount. Netflix's Q3 revenue guidance of $12.86 billion also fell short of Street estimates.
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That was not all, as Netflix said it would reduce the frequency of its "What We Watched" report from biannual to annual. These metrics help gauge engagement numbers, and the company is cutting back on the report's frequency at a time when there are concerns over a dip in engagement. While hours per member have decreased, Netflix said that engagement remains "healthy."
In response to a question on engagement, Co-CEO Greg Peters said during the Q2 earnings call that "there is not a linear relationship between view hours and revenue and profit because all hours are not created equal." Peters specifically pointed to live events, which have much lower proportionate watch time (based on the content spend) versus family or kids' content, for example. However, the executive stressed that live events help drive customer acquisition.
Notably, Netflix has scaled back on reporting its subscription numbers. In 2023, the company stopped providing guidance for the metric, and beginning in Q1 2025, it stopped reporting the number on a quarterly basis. Instead, the firm reports the metric when it crosses major subscriber milestones. Most recently, Netflix disclosed that it had 325 million subscribers globally at the end of 2025.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
