Netflix Faces Earnings Trial After Two Failed Mega-Deals and a 43% Stock Slide
Published on 07/01/2026 at 18:26 | Redaktion boerse-global.de
The streaming giant heads into its second-quarter earnings report on July 16 with a heavy load. Shares have lost nearly 14% in the past month alone and stand roughly 43% to 45% below their recent high — one of the steepest drawdowns in the company’s history. Four consecutive monthly declines, broken moving averages, and fresh 52-week lows have left the stock at €63.49, up a modest 1.45% on the day but with a relative strength index of 34.6 that suggests it is brushing oversold territory.
Two ambitious acquisition attempts have collapsed this year, compounding the pain. Netflix tried to buy Roku as a shortcut to building its own advertising technology, only to see Fox Corporation snatch the streaming platform for about $22 billion. Earlier, the company had agreed to acquire Warner Bros. Discovery for $82.7 billion, but pulled out in February after Paramount Skydance raised the bidding, making the price untenable. The back-to-back failures have unnerved investors, feeding a broader reassessment of Netflix’s ability to consolidate the sector.
Yet beneath the stock’s gloom, the advertising business is accelerating faster than expected. The ad-supported tier now counts more than 250 million monthly active users worldwide, up from 70 million in 2024 and 94 million in 2025. In markets where it is available, six out of ten new subscribers opt for the cheaper ad plan, a shift Netflix is encouraging by eliminating the lowest-priced commercial-free tiers in several countries. The company plans to roll out its proprietary ad technology into 15 additional markets this year, but it must now do so without the Roku infrastructure it had counted on.
Revenue from advertising is expected to double year over year in 2026, a target embedded in the full-year guidance of $50.7 billion to $51.7 billion. For the second quarter, management has guided for 13% revenue growth compared with last year and an operating margin of 32.6%. The quarter is also expected to see the steepest increase in content amortization for the year, with that burden easing in the second half. In Q1, Netflix delivered revenue of $12.25 billion — up 16% — and an operating margin of 32.3%.
Should investors sell immediately? Or is it worth buying Netflix?
All eyes will be on the post-earnings call, where co-CEOs Ted Sarandos and Greg Peters along with CFO Spence Neumann will field analyst questions. The stock’s slide partly reflects disappointment from January, when management refrained from raising the full-year outlook despite a strong first quarter. The exit of co-founder Reed Hastings from the board — without conflict, he said, to focus on philanthropy — added a layer of uncertainty. Jay Hoag, a director since 1999, has taken over as chairman with no sign of internal strife.
On the strategic front, Netflix is moving to bring more production in-house. It is nearing the close of a deal to buy the Radford Studio Center in Los Angeles, a 55-acre site with 1.2 million square feet of office and studio space, for roughly $400 million. The property last changed hands in 2021 for $1.85 billion before lenders including Goldman Sachs took it back. Closing is expected in the third quarter, and existing leases at Hollywood facilities, including one with Hudson Pacific Properties that runs to 2031, will be allowed to expire.
Wall Street remains broadly bullish even after the sell-off. The consensus among 50 analysts surveyed by S&P Global is “buy,” with an average price target of $114.15 and a range of $80 to $151.40. Jefferies reiterated its buy rating in early June but cut its target from $128 to $110, citing valuation pressure from AI themes. Morgan Stanley also stayed at “buy” late last month. Insider selling has been notable — about $130 million in stock sold over the past three months — but institutional investors have used the weakness to build positions.
Netflix at a turning point? This analysis reveals what investors need to know now.
The July 16 report will test whether organic ad growth can offset the void left by two failed mega-deals. If Netflix can show that its own technology and subscriber momentum are enough to double ad revenue this year, the valuation debate may quickly shift. For now, the stock is waiting for a catalyst, and the earnings call is the next best chance to provide one.
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