Netflix Stock Falls After Q3 Earnings as It Cuts Its 2026 Ad Revenue Forecast

Netflix made more money than Wall Street expected last quarter, but investors cared more about where growth is heading, and the streaming giant's stock slipped after hours on Tuesday.

The company released its third-quarter results after the market closed on Oct. 20. Here is what it reported, why the stock fell anyway, and what it may mean if you own Netflix directly or through a fund.

What did Netflix report for the third quarter of 2026?

Netflix earned $0.87 per share in the July-September quarter, beating the $0.82 analysts expected, on revenue of $12.87 billion, up 12% from a year earlier. But it cut its 2026 advertising revenue forecast to about $2.7 billion from about $3 billion, and its fourth-quarter outlook disappointed, so shares fell about 4% after hours.

Profit grew much faster than sales. Net income rose 44% to $3.66 billion from $2.55 billion a year earlier, according to the Associated Press. Revenue matched the $12.87 billion analysts surveyed by FactSet had forecast.

In its shareholder letter, Netflix said operating income rose 37% to $4.5 billion, and its operating margin, the share of each sales dollar left after running the business, climbed to 34.6% from 28.2% a year earlier. Free cash flow, the cash left after spending on operations and investments, came in at $2.9 billion.

Why did Netflix stock fall after beating on profit?

The biggest surprise was advertising. Netflix said it now expects 2026 ad revenue of about $2.7 billion, down from about $3 billion, because of a "slightly slower than expected rollout of some ad product capabilities." Advertising is one of the company's newer growth engines, so a cut of roughly 10% to that forecast got attention.

"It's concerning that the company lowered its estimate for its ad business," Ross Benes of Emarketer told the AP. He added that the guidance "is not as aggressive as investors have grown accustomed to."