Overview
- Netflix reported a record trailing net income of about $13.65 billion, a figure that includes a $2.8 billion pre‑tax termination fee from the collapsed Warner Bros. Discovery deal.
- Management is guiding third‑quarter revenue growth of 11.7% and full‑year 2026 revenue of $51.0 billion to $51.4 billion, which implies roughly 13%–14% growth for the year and marks a steady deceleration from late 2025.
- Operating profits are strong: trailing operating income is roughly $14.4 billion and management expects a 31.5% operating margin for 2026, showing recurring profitability beyond the one‑time payment.
- The market has cut the price investors are willing to pay for Netflix, driving the share price about 35%–40% below its June 2025 high as valuation multiples retraced sharply after the slower‑growth outlook.
- Investors point to ad revenue growth, share buybacks and high margins as the bull case, while historical precedent—seven past drops of 40% or more followed by recoveries—frames debate about whether the recent selloff is a buying opportunity or a sign of lasting slowdown.