Netflix Nears Its Cheapest Valuation in a Decade

What happened

Netflix shares have fallen almost 32% in 2026 and dropped a further 7% after its October 20 results. Earnings of $0.87 per share beat the $0.82 expectation and revenue rose 12% to $12.87 billion, yet the stock fell.

Confirmed

Global impact / market context

Investors focus on the outlook rather than past results. Netflix cut its 2026 advertising revenue forecast from $3 billion to $2.7 billion and guided fourth-quarter revenue below analyst estimates, which means expected future sales and ad income are weakening even while reported revenue grows.

Analyst inference

A low valuation can signal that investors expect slower growth, so the stock may stay cheap until advertising revenue and US viewership recover. Management changes and about 1,000 job cuts add execution risk, while improving cancellation rates support subscriber retention and cash available.

Analyst inference

What to watch

1. Netflix expects fourth-quarter revenue of $13.44 billion, below the $13.57 billion analysts predicted, and cut its 2026 advertising revenue projection from $3 billion to $2.7 billion. Confirmed
2. Watch whether the new Chief Content Officer, Peter Rice, changes the content lineup enough to lift US viewership, which management said has been lower than expected. Proposed
3. Track cancellation rates and advertising sales together: if retention holds but ad revenue keeps missing targets, profit per sale and cash available could come under pressure and keep the valuation low. Analyst inference

Evidence

• gurufocus.com