Netflix May Be Cheap Enough to Tempt Buyers After Earnings Drop

Netflix reported slightly better-than-expected earnings per share, but revenue came in just below Wall Street’s estimate. The company narrowed its full-year revenue forecast and guided for third-quarter growth below analyst expectations. Netflix will move its What We Watched report to an annual cadence, adding to investor scrutiny around engagement.

Netflix Inc. NASDAQ: NFLX has been one of the weakest large-cap media and technology stocks over the past year, with shares still sharply lower in 2026 heading into its Q2 earnings report. Investors who hoped the report would reverse that trend may have to wait. NFLX sold off after delivering a mixed report.

Netflix delivered a slight beat on adjusted earnings per share (EPS), with 80 cents per share coming in a penny above the estimate for 79 cents. But revenue of $12.56 billion came in slightly below the $12.58 billion expected.

Revenue was up 13% on a year-over-year basis, and the company’s operating margin came in at 33%. Both numbers were in line with the company’s prior forecasts.

Before the Magnificent Seven, there were the FAANG stocks: Meta Platforms Inc. NASDAQ: META , Apple Inc. NASDAQ: AAPL , Amazon.com Inc. NASDAQ: AMZN , Alphabet Inc. NASDAQ: GOOGL , and Netflix. These stocks were the darlings of the mobile and cloud computing buildout. At that time, Netflix was delivering organic growth on an epic level. So much, in fact, that Netflix took away password sharing and aggressively moved away from its ad-free programming tier, and consumers paid for the privilege.

But the one thing that Netflix can’t seem to outrun is its competition. The company says that it “only” has about 5% of its total addressable market. On the surface, that sounds like a company trying to explain why it still deserves to be part of the cool club. But it could also be a reminder that consumers have many options. Moreover, content generation continues to be a major expense that is coming at a time when the company is becoming more opaque about who is watching and for how long.

A notable takeaway from the report is that Netflix will now report engagement numbers (i.e., the What We Watched report) only in the first quarter starting in 2027. Management cited a goal of separating the publication of the report from earnings to keep the focus on its primary financial metrics of revenue and operating profit.

After becoming a streaming service in 2007, Netflix would report its engagement numbers every quarter. Since the company wasn’t profitable in its early days, engagement served as a proxy for future revenue and a breadcrumb on its path to profitability. Today, Netflix is generating much of its revenue from its ad business. Therefore, from management’s perspective, engagement numbers don’t carry as much weight as they used to.

That’s probably accurate. But once analysts have become accustomed to getting a specific data point, the absence of that data opens the door for interpretation. That’s not fair, and it’s not the primary reason NFLX is down. At the same time, if Netflix knew it was going to deliver strong engagement numbers, it would probably pre-release that information.