Netflix may be sitting on another tough quarter
Battered Netflix (NFLX) investors may end up tuning in to another dose of bad news when the company reports earnings on July 16.
Quick insight: "Given currency movement and a lack of hit programs, we believe more investors are expecting Netflix to lower full year numbers," KeyBanc Capital Markets analyst Justin Patterson warned in a note on Monday.
The Street may be surprised negatively if Netflix does cut its outlook. According to Yahoo Finance AlphaSpace data, analyst profit estimates on Netflix for 2026 have remained steady over the past 60 days and have fallen slightly for 2027.
But Netflix stock is trading as if another guidance letdown is in the cards. The stock is down 11% in the past month, bringing its year-to-date slide to 22%. Shares have plunged 41% over the past year.
Don't forget: Investors were left frustrated in April when Netflix failed to raise its full-year 2026 revenue guidance range from $50.7 billion to $51.7 billion.
The company's full-year operating margin guidance of 31.5% came in below the 32% analysts had expected. That suggests the "breakup fee" it gained from the failed Warner Bros. deal is masking higher content amortization costs.
Adding to the uncertainty, longtime chair Reed Hastings announced he was stepping down just as the company faces increasing pressure to prove its advertising business can scale.
"The narrative around Netflix reminds us of 2022, as concerns around engagement have evoked concerns around long-term growth and driven P/E multiple compression," Patterson said. "2022's challenges were addressed with an ad-tier and paid sharing. This time around, we believe levers will likely center around content and product diversification (both through TF1-type partnerships and live events) that aid perceived content quality, and support better monetization per hour."
Bottom line: All the arrows point to another disappointing earnings day for Netflix. The question one may want to ask is how disappointing and whether that's reflected in the stock price today.
Brian Sozzi is Yahoo Finance's Executive Editor, host of the 'Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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