Netflix Issues Weak Quarterly Forecast Days After Laying Off 6 Per Cent of Staff

By the Editorial Team · Wednesday, October 21, 2026

Netflix forecasted lower-than-expected fourth-quarter profits and announced a 6 percent workforce reduction alongside executive changes, causing its shares to fall over 5 percent in after-hours trading. The company faces mounting competition from platforms like YouTube and TikTok, prompting a shift toward diversifying offerings beyond streaming while recommitting to original content to sustain subscriber growth.

Netflix reported a fourth-quarter profit forecast that fell short of Wall Street expectations, just days after announcing layoffs affecting 6 percent of its workforce and replacing two senior programming executives. The company’s shares dropped more than 5 percent in after-hours trading, closing at US$68.69.

For the third quarter, Netflix recorded revenue of US$12.87 billion, representing an 11.8 percent increase from the previous year. While this growth aligned with analyst estimates, it marked the slowest revenue gain in nearly three years. The company projected fourth-quarter net income at US$2.79 billion, with earnings per share (EPS) of 67 cents, below the consensus forecast of US$3.07 billion and 73 cents EPS.

Netflix also lowered its advertising revenue outlook for 2026 to approximately US$2.7 billion, down from an earlier estimate of around US$3 billion. Executives attributed the shortfall to slower-than-anticipated rollouts of certain advertising product capabilities.

Having transformed the entertainment industry by popularizing streaming two decades ago, Netflix now faces intensified competition from platforms such as YouTube and TikTok, which have seen significant increases in user engagement. In response, the company has expanded into areas beyond streaming, including video games, podcasts, and live events, aiming to attract and retain subscribers.

Industry analysts have expressed concerns about the company’s strategic direction. Paolo Pescatore of PP Foresight described Netflix as a “highly profitable machine” but suggested the company is spreading its resources too thin across less effective ventures. He recommended a renewed focus on delivering compelling content to drive subscriber growth.

In its shareholder letter, Netflix emphasized plans to continue broadening its content library through licensing deals while prioritizing its core streaming service. The company stated it intends to invest in original programming designed to generate buzz, increase membership, and maintain its position as an essential entertainment platform.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.