Netflix Beat Profit Forecasts — So Why Did the Stock Fall 6% After Hours?

Netflix beat profit forecasts — and the stock still fell

Netflix (NASDAQ: NFLX) reported third-quarter revenue of $12.87 billion, up 11.8% year over year, and earnings per share of $0.87, beating the $0.82 analysts expected — yet its shares fell about 5% to 6% in after-hours trading on Tuesday, October 20, 2026, after the company issued fourth-quarter guidance below Wall Street forecasts and cut its 2026 advertising revenue target.

That split reaction — a strong quarter looking backward, a softer one looking forward — is why Netflix dominated finance feeds overnight. The stock had already closed the regular session down 1.7% at $68.69, and it slid further once the outlook landed.

What happened: a profit beat in Q3

On the numbers Netflix actually reported, the quarter was solid:

• Revenue: $12.87 billion, up 11.8% from $11.51 billion a year earlier, in line with consensus — though that growth rate was its slowest in nearly three years.
• Net income: $3.66 billion, up about 44% year over year.
• Earnings per share: $0.87, up from $0.59 a year earlier and ahead of the roughly $0.82 consensus.
• Operating margin: 34.6%, up sharply from 28.2% a year earlier, helped by the timing of expenses.
• Buybacks: Netflix repurchased $4.8 billion of its own stock in the quarter, its largest buyback ever, with $22.3 billion of authorization remaining.

There was also a bright spot overseas: Netflix said India delivered its largest quarter of paid sign-ups ever, with revenue there growing about 18% in constant currency and viewing hours up 24%.

Why it's blowing up: the guidance, not the quarter

Investors focused on what Netflix said comes next. For the fourth quarter, the company forecast revenue of about $13.44 billion and earnings per share of $0.67 — both below consensus estimates of roughly $13.52 billion and $0.73. Forecast Q4 net income of $2.79 billion also came in under the roughly $3.07 billion analysts expected, and the guided operating margin of about 26% sat below the near-28% consensus.

Two full-year revisions added to the pressure. Netflix narrowed its 2026 revenue guidance to about $51.1 billion, at the low end of its prior range, and lowered its full-year free cash flow forecast to about $12 billion from roughly $12.5 billion. Most watched of all, it cut its 2026 advertising revenue target to about $2.7 billion from about $3 billion, saying some ad product capabilities rolled out more slowly than expected. Advertising is the growth engine investors are counting on as subscription growth matures, so a cut there landed hard.

The report also carried restructuring costs. Netflix recently trimmed about 1,000 jobs — roughly 6% of its workforce, its largest cuts since 2022 — and said the reductions will weigh on Q4 operating income by about $161 million. The company also announced a content leadership change, with longtime chief content officer Bela Bajaria to be replaced by former Disney and Fox executive Peter Rice.

Key facts at a glance

• Q3 revenue: $12.87 billion, up 11.8% year over year, in line with estimates.
• Q3 EPS: $0.87 versus $0.82 expected; net income $3.66 billion, up about 44%.
• Q4 guidance: $13.44 billion revenue and $0.67 EPS, both below consensus.
• 2026 ad revenue target cut to about $2.7 billion from about $3 billion.
• Full-year revenue guidance narrowed to about $51.1 billion; free cash flow lowered to about $12 billion.
• Shares fell about 5% to 6% after hours, extending a slide of more than 25% in 2026.

What's next

Netflix said it will provide 2027 financial guidance in January, which now becomes the next big test: investors will want proof that advertising can scale faster and that the reorganization translates into stronger content and engagement. Engagement growth was just 2% in the first half of 2026, and the company plans to move its viewing report to annual publication from 2027 — a change that will make that debate harder to settle quarter by quarter. For now, the message from the market is clear: beating the last quarter was not enough when the next one got smaller. This post reports what happened and how markets reacted; it is not financial advice.

Sources

• AskTraders — Netflix Stock Falls After Hours as Q4 Guidance Misses Consensus
• The Financial Economy — Netflix Q3 Results: Profit Up 44%, Shares Slide on Outlook
• exchange4media — Netflix Q3 profit jumps 44%, but weak advertising outlook sends shares lower
• InvestingLive — Netflix tops Q3 profit forecast but trims two full-year targets
• The Motley Fool — Netflix Q3 Revenue Rises 12% on Pricing Power

FAQ

Why did Netflix stock fall after earnings?

Shares fell about 5% to 6% after hours because fourth-quarter guidance came in below analyst expectations and Netflix cut its 2026 advertising revenue target, even though Q3 profit beat forecasts.

How much money did Netflix make in Q3 2026?

Netflix earned net income of $3.66 billion on revenue of $12.87 billion, with earnings per share of $0.87 — up from $0.59 a year earlier.

What did Netflix guide for Q4 2026?

Netflix forecast Q4 revenue of about $13.44 billion and EPS of $0.67, below consensus estimates of roughly $13.52 billion and $0.73.

Why did Netflix cut its advertising forecast?

The company lowered its 2026 ad revenue target to about $2.7 billion from about $3 billion, saying some advertising product capabilities rolled out more slowly than expected.