Netflix Shares Fall After Mixed Q2 Earnings Report; Execs Say “Quality And Variety” Matter As Much As View Time

Netflix shares dropped in after-hours trading Thursday after the streaming giant reported lackluster results for the second quarter.

Shares, which have already fallen nearly 45% over the past year, shed 9% after the close of trading as investors processed the earnings report. It showed revenue slightly below Wall Street expectations and a narrow beat on earnings. Revenue came in at $12.56 billion, just shy of the consensus for $12.58 billion, while earnings of 80 cents a share nipped forecasts by a penny.

The financials were released along with the company’s semi-annual “What We Watched” report on viewership. In the first half of 2026, Netflix said, subscribers watched 97 billion hours, up 2% over the same period in 2025.

Despite the overall uptick, pressure has been mounting on Netflix in terms of its engagement metrics, with critics saying it is losing ground to YouTube, TikTok and other platforms. After Deadline’s extensive reporting on a worrisome trend of second seasons dropping off more sharply from first seasons than in previous years, other media outlets have picked up on the theme. UCAN Netflix’s Head of UCAN Scripted Series Jinny Howe offered Deadline the first on-the-record assessment of the situation, arguing that the premiere-vs.-premiere comparisons between the first and second seasons often fails to capture the full picture. Nevertheless, numerous reports in recent days have described the efforts of senior executives to boost engagement.

The company appeared to acknowledge the need to regroup in its quarterly shareholder letter. “As we’ve developed an increasingly sophisticated understanding of how consumers ascribe value to our service, we know not all hours are equal,” the letter said. “Time spent is just one aspect of strong engagement – quality and variety also matter. The key is to improve across all of those dimensions: quality, variety, and quantity.”

The issue with engagement has been cast in a different light since the company lost out on acquiring Warner Bros. Discovery earlier this year. The bid was a damned-if-they-do/damned-if-they-don’t effort, as it signaled to many observers that the company was looking to shore up viewership with an inorganic growth move, by far the largest in its history. Despite execs’ protests to the contrary, the bid was seen as a signal that its primary business had plateaued.

Netflix forecasts revenue growth of 12% in the third quarter, and has narrowed its full-year revenue forecast to $51 billion to $51.4 billion. It still expects to double 2025 levels of ad revenue, hitting $3 billion.

There has been mounting anticipation of the earnings report on Wall Street, with scrutiny growing on the company in the wake of its being outmaneuvered by Paramount in the acquisition battle for Warner Bros. Discovery. Some analysts have drawn parallels between the current period and 2022 when the streaming giant shed subscribers and decided to launch an ad business and paid password sharing.

Netflix shares have skidded to an 18-month low, down 21% in 2026 to date, as skepticism lingers about the company’s user engagement, competitive set and M&A aspirations.