Netflix Forecasts Second Consecutive Quarter of Slowing Growth

Summary

Geetha Ranganathan analyzes Netflix's earnings report, highlighting a weak Q3 guidance, a sharp deceleration in engagement growth, and intensifying competition from YouTube and live sports. She maintains a bearish view on the stock, arguing the company needs a better content diversification strategy.

• Netflix Q3 revenue guidance fell well below consensus at 11.7% vs ~13% expected.
• Engagement growth decelerated to 2% in H1 2026, down from mid-teens previously.
• Competition from World Cup, Winter Olympics, and YouTube impacted engagement.
• Nielsen data showed Netflix's share of TV viewing time at its lowest in 10-11 months.
• YouTube's engagement share continues to grow, adding pressure.
• Netflix plans to debut short-form content in August to counter short-form competition.
• The company spends less than 4% of its $20B content budget on sports, far below peers like Disney.
• Ranganathan remains bearish, seeing no clear catalyst to reverse slowing momentum.