Netflix Has 2 Problems Behind Falling Stock – And It’s Not YouTube, Says Co-CEO Ted Sarandos
Netflix (NFLX) is seeing its audience increasingly besieged by the behemoth that is Alphabet’s (GOOG, GOOGL) YouTube, but the two main problems it will face as it seeks to halt a major stock decline this year are more internal.
And they can’t be solved immediately by laying off 6% of the workforce and, surprisingly, removing Bela Bajaria as chief content officer in favor of former Disney (DIS) chief Peter Rice, as we saw this week.
Ultimately, reviving Netflix’s growth will depend on a steady pipeline of new creative talent and more content home runs.
“Most importantly, Rob, Peter Rice understands talent relationships, and in a competitive market, creative talent has a choice in where they want to work, and we want Netflix to always be the place where they love to do the best work of their lives. Peter is exactly the right person to lead these efforts in the United States and around the world,” Netflix co-CEO Ted Sarandos said during the company’s earnings conference call Tuesday evening.
“The United States is also working,” he continued. “It’s just not growing as fast as we would like or as quickly as we would like. We’ve had some really strong doubles and triples this year. But the other territories are counting on some of these titles as tours to travel around the world.”
Netflix released a mixed third-quarter earnings report, amid these doubles and triples on the content front, with earnings of $0.87 per share, beating Wall Street estimates of $0.82.
Revenue of $12.87 billion was in line with analysts’ expectations.
For the fourth quarter, Netflix forecast revenue of $13.44 billion, below expectations of $13.57 billion.
The company also reduced its annual turnover advertising revenue outlook to around $2.7 billion, up from $3 billion.
Netflix stock fell 6% in premarket trading. The stock was down 26% this year before the results were released.
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“2026 was more of a transitional year than we expected. While the latest missed ads are frustrating, we find comfort in member retention that is still healthy and corrective actions within content that can lead to potential re-acceleration in 2027E and 2028E (which we are not modeling today),” said Justin Patterson of KeyBanc.
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