Netflix heads into Q3 report amid layoffs and engagement doubts

what happened

Netflix will report third-quarter earnings after the market closes on Tuesday. Analysts polled by FactSet expect net income of $3.46 billion, up from $2.55 billion a year earlier, and revenue of $12.87 billion against $11.51 billion. The shares are down 26% this year and were recently trading 1.4% lower at $69.57.

The report follows a series of leadership changes. Netflix said it would cut about 6% of its staff, mostly in tech, product, legal and HR, in its largest layoff round since 2022. A day later it parted ways with chief content officer Bela Bajaria and named former Disney executive Peter Rice to oversee content. Wedbush analysts said the company is working to change course, as it has done before in tough periods.

Third-party data points to continued share loss to YouTube since the second quarter, which StoneX analyst Daniel Kurnos said suggests a weaker setup. Analysts see advertising and the expansion in India as bright spots.

why it matters

Weak engagement and growth have made investors cautious, so the market reaction will likely hinge on viewing trends and advertising commentary. The streaming sector will also read the result as a gauge of competition with YouTube.

market impact

Netflix shares and streaming sector: results and engagement data set the direction for the stock

tags

instruments