Netflix stock just hit a two-year low, and Ted Sarandos is blaming the shows
The quarter beat estimates. The stock fell anyway, and the company's answer is that its content needs to be better.
Netflix shares fell about 7 percent on October 21 to under $64, their lowest since August 2024 and down nearly 30 percent for the year. The trigger was the Q3 2026 report: revenue of $12.87 billion grew 11.8 percent — in line with estimates, and the slowest growth in three years, down from 17 percent a year ago.
The sorest number is advertising. Netflix cut its 2026 ad revenue forecast from $3 billion to about $2.7 billion, blaming a "slightly slower rollout of some ad product capabilities" — a $300 million walk-back on the business that was supposed to be the next growth engine.
An October to remember
The earnings capped a month of house-cleaning:
- October 14: about 1,000 jobs cut, roughly 6 percent of the workforce.
- With the report: chief content officer Bela Bajaria removed and replaced by veteran TV executive Peter Rice. Film head Dan Lin, his deputy Doug Belgrad, and original series director Carolina Garcia are also out.
- The explanation: none. The shareholder letter didn't address the leadership changes, per Variety.
Sarandos praised Bajaria on the call but said the company could do better, and located the fix in one place: stronger execution on must-watch shows and films. Behind that sentence is the metric Wall Street keeps circling — per-subscriber viewing has been declining for several quarters, especially in the US, while analysts push Netflix for an answer to YouTube and TikTok eating the hours.
Don't miss: Netflix is dropping The Hunting Wives season 2 on Thanksgiving. Maybe don't watch it with grandma
October at Netflix: 1,000 layoffs, a replaced content chief, a $300 million ad-forecast cut, and a two-year stock low — in a quarter that beat earnings estimates.
The admission inside the strategy
A company that fires its content leadership and prescribes "more must-watch shows" is saying the current shows aren't that, and viewers got there before the analysts did. The reaction threads read less like shock than confirmation:
"We're definitely in an entertainment recession if I've ever seen one. And we're at the point where studios are getting desperate. I mean Netflix's stock is at a 52-week low…"
— r/MediaMergers commenter
The fundamentals are not in crisis: net income rose to $3.66 billion, margins beat expectations, and the subscriber base tops 325 million. What cracked is the assumption that Netflix's library automatically justifies its price — and the fix Sarandos named, hits on demand under a new content chief, is the one thing in streaming nobody has ever been able to schedule. The first test of the Rice era is simply whether 2027's slate produces a show people rearrange their evening for.
Previously we wrote: Did Netflix save Hollywood? The director of Conclave thinks so