Netflix stock fell 10% in pre-market trading on Friday after the streaming giant reported slightly higher revenue for the first quarter of 2026 but expected second-quarter revenue and operating profit to be lower than expected.
For the second quarter, Netflix expects revenue to increase 13% and operating margin to be 32.6% (versus 34.1% a year ago). The company said operating profit will decline as the increase in content amortization will be greater in the first half of 2026 “due to the timing of title launches.” These metrics were slightly below Wall Street’s previous consensus forecasts. The company said it expects content amortization growth in 2026 to be highest in the second quarter, then slow to “mid-to-high single-digit growth” in the second half of the year.
“Netflix’s close first quarter, weak second quarter guidance, and Reed Hastings’ decision to leave the company’s board have left investors less optimistic about this quarter,” Alicia Reese, an analyst at Wedbush Securities, said in a note issued Friday. That said, “Our results show resilience to rising prices, but advertising growth should provide significant upside later this year.” The firm maintained an “outperform” rating on Netflix stock and a 12-month price target of $118.00 per share.
Meanwhile, investors may have been hoping that Netflix’s recent price hike in the U.S. — the first in about 14 months since its last hike, and faster than previous increases — would weigh on earnings. However, the company maintained its full-year sales forecast and reiterated its previous forecast of $50.7 billion to $51.7 billion in 2026.
Co-CEO Greg Peters said in Netflix’s earnings interview that the company’s initial full-year outlook already factored in “price adjustments that we expect to make throughout the year,” adding, “It’s very rare for us to see price changes that are unexpected or what you might call a surprise.”
Netflix’s Q3 2026 should reflect the “full impact” of the U.S. price change, but the company also announced price increases in Spain on Thursday, writes TD Cowen analyst John Blackledge (maintaining a “buy” rating and $112.00 per share target). He said second-quarter efforts “should benefit from solid content,” including the return of hits like “Beef” and the second season of “Temptation Island.”
“Engagement continues to be a key topic of discussion,” Brian Pitts of BMO Capital Markets said in a research note. “While total watch time in Q1 2026 grew at a similar rate to the 2% growth in the second half of 2025, the quality of engagement was at a new all-time high.” “Advertising continues to grow as fill rates improve, with 60% of new subscribers in ad tier regions signing up for ad-supported tiers. Estimates remain largely unchanged as we make minor adjustments.” He reiterated his “outperform” rating and $135 per share price target on Netflix.
Ralph Schuckert, equity research analyst at William Blair & Co., said Netflix has “plenty of runway for continued growth.” He rates the stock “outperform” and has a price target of $107.79 per share. The streamer still only accounts for about 5% of the global TV viewing share and has penetrated less than 45% of the total addressable market for broadband households, he noted. Additionally, Netflix reiterated in its first quarter earnings report that its advertising revenue is expected to nearly double to $3 billion in 2026. And the company believes the share of programmatic advertising is rapidly approaching half of all non-live ads it serves, which will further diversify the service, Schackert said.
Not everyone on Wall Street is optimistic about Netflix’s prospects. Pivotal Research Group analyst Jeffrey Wlodarczak maintains a “hold” rating on the stock, with a target of $96 per share by the end of 2026. “We remain concerned that short-form entertainment (TikTok, Instagram, X, YouTube Shorts, Snaps, etc.) is doing to streaming what streaming has done to traditional television, especially among Gen Z consumers,” he wrote in a note.
“Our overall view is that NFLX is well valued at current levels and increasingly growth is likely to be driven by price appreciation (and advertising margins from a relatively low base) rather than subscriber growth,” Wlodarczak said. “We see this story as lacking in excitement compared to the rich reviews.”
Netflix’s stock price was around $97.81 a share before the market opened on Friday, about 30% above its 52-week low of $75.01, despite taking a hit from second-quarter estimates. That low point came in February, when Netflix’s $83 billion deal for Warner Bros.’ streaming and studio businesses was still in effect. Investors were concerned about the large amount of new debt Netflix would take on, along with integration challenges and regulatory hurdles. The stock rebounded on February 26 when Paramount Skydance became the successful bidder for WBD and paid Netflix a $2.8 billion termination fee.
