Netflix beat its own profit forecast in the third quarter, raised margins, and bought back more stock than in any quarter in its history. The stock has kept falling anyway.
Shares closed at $63.26 on November 10, 2026. That is about 46% below the 52 week high of $116.73 and roughly 8% below where the stock sat the day the results came out. Below are the numbers from the filings, what the company now expects for the rest of 2026, and what investors are paying at today’s price.
All share figures here reflect the ten for one stock split Netflix completed on November 14, 2025, so older per share numbers you may remember are ten times larger.
What Netflix reported for the third quarter
The results came out on October 20 in the shareholder letter filed with the SEC.
- Revenue was $12.87 billion, up 11.8% from a year earlier and in line with the company’s own forecast.
- Operating income was $4.46 billion, up 37%.
- Operating margin was 34.6%, compared with 28.2% a year earlier.
- Net income was $3.66 billion, or $0.87 per diluted share, up 49%.
- Free cash flow was $2.88 billion.
Analysts surveyed by FactSet had expected 82 cents a share, according to the Associated Press, so earnings came in ahead. Netflix itself said the profit upside was “primarily due to the timing of expenses,” which means some of those costs move into the fourth quarter instead of disappearing.
Revenue growth came from more memberships, higher prices and advertising. The company said churn improved from a year earlier both globally and in the U.S., and was better than it had forecast.
By region, the U.S. and Canada brought in $5.63 billion, up 11%. Europe, the Middle East and Africa grew 11% to $4.11 billion. Latin America grew 17% and Asia Pacific 12%. On a currency neutral basis, every region slowed compared with the start of the year.
Why the stock fell after a profit beat
Shares closed at $68.69 on October 20, before the report, and $65.04 the next day, a drop of about 5.3%. Three things in the letter explain most of the reaction.
The first is advertising. Netflix now expects about $2.7 billion of ad revenue in 2026, down from roughly $3 billion it had projected before. It blamed a “slightly slower than expected rollout of some ad product capabilities.” Advertising is the part of the business investors had been counting on for faster growth, so a 10% cut to that target landed hard.
The second is the fourth quarter forecast. Netflix guided to $13.44 billion of revenue, which the AP reported was slightly under the roughly $13.5 billion analysts expected. The fourth quarter operating margin forecast is 26.0%, well below the third quarter’s 34.6%. Part of that is normal, since content spending is heavy at year end, and about 1.2 percentage points comes from layoffs the company announced recently.
The third is viewing. The letter addressed it directly: “We know there’s some investor concern about our view hours growth.” Netflix said member response to its 2026 price increases matched past increases, and it wants to grow viewing hours faster. It did not give a global view hours figure.
The company also lowered its 2026 free cash flow forecast to about $12.0 billion from $12.5 billion, mostly because of a real estate purchase it expects to close in the fourth quarter.
The $2.8 billion that inflates 2026 profit
If you look at Netflix’s first quarter, net income was $5.28 billion, well above operating income of $3.96 billion. The difference is not from streaming.
According to the third quarter 10-Q, Warner Bros. Discovery ended its merger agreement with Netflix to sign a deal with Paramount Skydance, and Paramount paid Netflix a $2.8 billion termination fee on Warner’s behalf. Netflix booked it as other income in the first quarter of 2026.
That matters for valuation. Earnings per share for 2026 will look higher than the business alone produced, so a simple price to earnings ratio built on 2026 results makes the stock look cheaper than it is. Operating income and free cash flow are cleaner measures this year, and those are what the valuation section below uses.
Full year 2026 guidance
Netflix’s forecast for the full year, from the October letter:
- Revenue of $51.1 billion, up 13%, or 12% excluding currency moves. That is 0.2% below the midpoint of its earlier range.
- Operating margin of 31.5%, up from 29.5% in 2025.
- Operating income growth of more than 20%.
- Free cash flow of about $12.0 billion.
Adding the reported first three quarters to the fourth quarter forecast gives operating income of about $16.1 billion for 2026.
The company also said its ad supported plan will launch in 15 more countries in 2027, starting in March with nine countries in Europe, the Middle East and Africa plus Colombia, Peru and New Zealand. Netflix said its audience is approaching one billion people.
Buybacks and the balance sheet
Netflix repurchased 63.9 million shares for $4.8 billion in the third quarter, the largest buyback quarter it has ever had. That works out to an average of about $75 a share, above today’s price. It had $22.3 billion left under its authorizations at the end of September.
Diluted share count fell to about 4.20 billion from 4.34 billion a year earlier, a decline of a little over 3%.
At the end of the quarter Netflix had $15.3 billion of gross debt and $8.2 billion in cash. Debt rose about $1 billion during the quarter because the company sold new bonds to pay off a $1 billion note that matures in the fourth quarter. The company said its capital plan is unchanged: reinvest in the business first, keep a healthy balance sheet, and return extra cash through repurchases.
What NFLX costs at $63
Using the November 10 close and the share count in the letter:
- Market value is about $265 billion.
- Adding debt and subtracting cash gives an enterprise value of about $272 billion.
- That is roughly 16.9 times the $16.1 billion of operating income Netflix expects for 2026.
- The $12.0 billion free cash flow forecast is about 4.5% of the market value.
For comparison, the stock was trading near $117 within the past year with the same business and slightly lower profits. The drop since then reflects slower revenue growth, from 17% a year ago to about 12% now, and lower expectations for advertising, not a fall in earnings.
These figures do not tell you where the stock goes next. They tell you what the market is paying for a business guiding to 13% sales growth and a 31.5% margin this year.
What to watch next
The fourth quarter is the next real test, and it is packed. Netflix has its first NFL game on Thanksgiving Eve, two NFL games on Christmas Day and the Tyson Fury vs. Anthony Joshua fight, along with the final season of Emily in Paris and a new David Fincher film. Live events are a big part of how Netflix sells advertising, so ad results in the January report will get close attention.
Specific things to check when the fourth quarter letter comes out, likely in January:
- Whether revenue hits the $13.44 billion forecast
- Whether 2026 ad revenue lands near $2.7 billion, and what the 2027 ad target is
- The first revenue and margin forecast for 2027
- Any figure on viewing hours
- The pace of buybacks at prices well below the third quarter average
If you are comparing Netflix with other large companies we have covered, our breakdowns of Apple and JPMorgan use the same approach of company filings and today’s price. If you hold the stock at a loss in a taxable account, our guide to tax loss harvesting before December 31 explains how a sale can offset gains this year.
This article summarizes public filings and market data as of November 10, 2026. It is not investment advice, and it does not predict a price.
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