Netflix became a leader with popular shows like Bridgerton, Squid Game and Stranger Things, which once pushed its value above $500 billion. Now, the company needs to reassure investors that it can keep growing.
Netflix shares have had a tough 2026, dropping 21% for the year by Thursday’s close. They fell another 10% in premarket trading on Friday after a weak second-quarter earnings report.
Netflix is still a major player in television, but more people are watching videos on their phones, which means more competition from platforms like TikTok, YouTube, and Instagram. On Thursday, Netflix said that total hours watched on its platform grew 2% in the first half of 2026 compared to last year, but its share of the U.S. streaming market is still shrinking, according to Nielsen.
Investors are more worried that lower engagement could hurt Netflix’s revenue and profit. An analyst at MoffettNathanson said there is now a common belief that fewer viewing hours will soon lead to weaker financial results.
Adding to these worries, Netflix is sharing less information with the market. The company stopped reporting subscriber numbers last year and announced Thursday that it will only release its engagement report once a year instead of twice, starting in 2027.
A Morningstar analyst said investors fear Netflix’s business is getting weaker, and that cutting back on engagement reports will likely make those worries worse. The move toward less transparency was seen as a main reason for Friday’s stock drop.
With less information about engagement and subscribers, investors will likely focus more on earnings and revenue, which are also showing some weakness. Netflix reported second-quarter revenue of $12.56 billion, just under the $12.58 billion analysts expected, and its forecast for third-quarter earnings was also lower than predicted.
