Netflix shares fell 5.3% on the Nasdaq on Wednesday to close at $65.04, their lowest closing level since August 2024. The stock touched $64.10 intraday, setting a new 52-week low. While third-quarter earnings per share topped expectations, a lower advertising revenue target and a soft fourth-quarter forecast became the main focus for investors.
Earnings beat expectations, but advertising guidance falls short
Netflix reported third-quarter earnings per share of $0.87 on Tuesday, ahead of the analyst consensus of $0.82. Revenue came in at $12.87 billion, in line with expectations. On the quarter's reported figures alone, the company did not materially diverge from market forecasts.
The change in management's forward-looking commentary, however, altered the market's view of the stock. Netflix now expects advertising revenue of about $2.7 billion in 2026, below its previous target of roughly $3 billion. The company also forecast fourth-quarter revenue of $13.44 billion, below the $13.51 billion expected by analysts.
Advertising has been a central part of Netflix's growth strategy. A year earlier, the company described the third quarter as its strongest period for ad sales and projected more than a doubling in advertising revenue. The lower target suggests that the advertising business may expand more slowly than previously planned, reducing expectations for the contribution from this newer revenue stream.
Shares break below key $65.11 support
From a technical perspective, Wednesday's close was $0.07 below the $65.11 support level. That level held during the July sell-off and marked a closing range that Netflix had not decisively broken since August 2024.
The stock also fell below an upward trendline that began at its 2022 low. Netflix is now about 51% below the $134.09 high reached in June 2025 and is trading below its 50-day exponential moving average of $72.92 and its 200-day exponential moving average of $82.61.
If daily and weekly closes confirm a break below $65.11, the chart points to potential reference levels at the August 2024 low of $58.86, the May 2024 low of $54.41 and the July 2023 high of $48.36. Those levels are approximately 9.5%, 16.3% and 25.6% below Wednesday's $65.04 close, respectively.
The 2022 low of $16.09 represents a more extreme historical scenario, not the current base case. A recovery above $65.11 would leave open the possibility that Wednesday's move was a false breakdown, while a move back above $70.45 would temporarily ease the stock's weak technical pattern. The weekly close on October 23 will be another level for investors to monitor.
Analysts cut targets as ratings diverge
Several firms lowered their Netflix price targets after the earnings report, although most retained buy ratings. Bank of America cut its target from $105 to $90, Bernstein reduced its target from $95 to $80, JPMorgan lowered its target from $85 to $81, and Morgan Stanley cut its target from $80 to $77.
Barclays reduced its target from $70 to $65 and kept an equal-weight rating. Pivotal Research also lowered its year-end 2026 target. The overall analyst target-price median stands at $88.26, about 36% above Wednesday's close, but the lowest target has fallen to $65. The spread indicates a widening divide over Netflix's growth prospects.
Deutsche Bank analyst Bryan Kraft kept a $93 target and a buy rating, arguing that the market's reaction to the report was too severe. Needham analyst Laura Martin, meanwhile, downgraded Netflix from buy to hold and withdrew her previous $120 target.
Content spending and platform competition remain in focus
Martin said Netflix's content challenges have become increasingly apparent. The company recently appointed Peter Rice as chief content officer, replacing Bela Bajaria, but Martin expects Rice could need roughly two years to reshape a content portfolio valued at about $20 billion. She also sees the possibility of sizable write-downs during that process.
Martin expects Netflix to remain under pressure from YouTube competition and from the possibility that revenue growth slows to the single digits in 2027. For investors, the lower advertising target is therefore more than an isolated quarterly adjustment: it bears on content-spending efficiency, user growth and the competitive position of the platform, all of which feed into valuation.
Netflix has previously suffered a much steeper share-price decline. From its November 2021 peak to its May 2022 low, the stock lost about 77% in total, including a one-day drop of as much as 35% after the company reported its first subscriber decline in a decade. The current situation differs in that Netflix's third-quarter 2026 revenue still grew about 12% year on year and did not come with the same subscriber-loss backdrop.
The market consensus puts Netflix's 2027 earnings per share at $3.79. At a share price of $16.09, that would imply a price-to-earnings ratio of about 4.2 times, compared with roughly 17 times at Wednesday's close. The comparison places $16.09 in an extreme-pressure scenario rather than among the outcomes established by the latest report.