Netflix falls 7% on revenue miss, reduced viewer data

Netflix shares dropped 7.26% to $68.95 after the streaming giant reported second-quarter results that fell short of modest expectations. The company posted adjusted earnings of 80 cents per share, beating estimates by a penny, but revenue of $12.56 billion missed the $12.58 billion consensus.

The 13% year-over-year revenue growth and a 33% operating margin aligned with prior company forecasts. However, free cash flow declined to $1.5 billion from $2.3 billion in the year-ago quarter due to higher cash tax payments. Netflix maintained its full-year free cash flow guidance of approximately $12.5 billion, a figure bolstered by the after-tax benefit of a Warner Bros. Discovery termination fee.

Beyond the slight revenue miss, management announced it will stop publishing quarterly engagement data starting in 2027, shifting to an annual release in the first quarter. Since its early unprofitable days, viewership hours served as a key proxy for future revenue. While Netflix now generates substantial ad revenue, reducing this data point removes a layer of transparency just as competition intensifies across the sector.

The selloff cements a bearish technical structure that has been building since October 2025, with the stock consistently failing to hold above its 200-day moving average, currently near $94. Once a flagship growth stock of the FAANG era, Netflix is now grappling with a market that punishes even marginal misses during a strong broader earnings season. Shares are testing the $70 support level, a zone that has held twice this year.

The steep decline from a 52-week high of $126.71 has compressed the forward price-to-earnings ratio to around 20 times. While the consensus price target of $104.78 implies meaningful upside, analysts had already been lowering their forecasts heading into the report. The company noted it "only" has about 5% of its total addressable market, highlighting both potential runway and the reality of a crowded streaming landscape.