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Netflix Growth Slows, Stock Slides 40%
25 Sep
Summary
- Netflix revenue growth decelerated in Q1 and Q2 2026.
- Stock price fell over 40% from its 52-week high.
- Profits continue to grow despite slowing revenue growth.
Netflix's revenue growth has decelerated, with figures for the first two quarters of 2026 showing a decline from the prior year's pace. Revenue rose 16.2% in Q1 2026 and 13.4% in Q2 2026, a slowdown from the 17.6% growth seen in Q4 2025. Management projects approximately 12% growth for the third quarter of 2026.
The company's stock price has reflected these concerns, trading over 40% below its 52-week peak as of the current date, September 25, 2026. This decline has reset the stock's valuation to approximately 19 times projected earnings for next year.
Despite the cooling revenue growth, which is attributed more to tough year-over-year comparisons than slowing demand, Netflix's profitability remains robust. Operating income increased 11% year over year in the second quarter, and the company anticipates an operating margin of 31.5% for 2026, up from 29.5% in 2025.
Management's revised full-year revenue forecast suggests growth will level off around 12% to 14%. While this valuation may be considered fair, it is not an immediate bargain. Investors are advised to hold the stock for now and reconsider buying once reported quarters demonstrate sustained growth stabilization.
