Chasing hits: Why investors are losing interest in Netflix

A report with no margin for error

Netflix’s second-quarter report triggered the latest selloff. Revenue rose 13% to $12.56 billion but fell short of the $12.59 billion analysts had expected. Net income reached $3.4 billion, up from $3.13 billion a year earlier, while earnings per share came in at $0.80 versus a forecast of $0.79.

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The results were not disastrous, but the market had expected more. Netflix forecasts third-quarter revenue of $12.9 billion and earnings of $0.82 per share, both slightly below Wall Street expectations. The outlook also points to a second consecutive quarter of slowing revenue growth.

After the report was released, Netflix shares fell more than 8% in after-hours trading. The decline extended a prolonged selloff: since reaching a record high on June 30, 2025, the stock has lost about 45%, wiping roughly $259 billion from the company’s market value. Netflix shares have fallen after each of the company’s four previous quarterly reports.

The second-season breaking point

Netflix’s main problem is not the number of subscribers but how much time people spend on the platform. Total viewing time increased by only 2% in the first half of 2026. That is a weak result for a service that continues to raise prices and spend more on content.

Interest in returning series has declined particularly sharply, Bloomberg reports. The second season of One Piece lost more than 30% of its audience compared with the first, Beef lost over 70%, and The Night Agent shed around 50%. Audience numbers for the third season of The Night Agent fell by another 35%. The latest season of Avatar: The Last Airbender lost more than 60% of viewers in its first week alone.

The problem is not limited to one unsuccessful title. On average, Netflix shows lose more than 30% of their audience after the first season. In the first five months of 2026, the service produced only two major hits: His & Hers and the fourth season of Bridgerton. After Bridgerton, the platform went almost four months without another series of comparable scale.

Weak viewing figures do not mean Netflix has lost recognition within the entertainment industry. The service received 111 Emmy nominations but ranked behind HBO and HBO Max for the second consecutive year. The two services received 122 nominations, Variety reports.

Sports, advertising, and creators

Netflix is trying to offset weak engagement by expanding into new formats. The company is increasing investment in live programming, sports rights, video podcasts, and content from popular online creators. In recent months, the service has signed agreements with YouTube personalities and launched a partnership with French broadcaster TF1.

Advertising is the main focus. Netflix expects its ad revenue to double to $3 billion in 2026. Sports broadcasts help attract advertisers and new subscribers: six of the ten strongest sign-up days over the past five years were linked to live events.

However, these programs still account for only a small share of overall viewing. Netflix directs more than 5% of its content budget to live programming, even though it generates only around 1% of total viewing time. The company continues to buy rights to NFL games, MLB events, the Women’s World Cup, and WWE programming, despite such projects costing more than traditional series and films.

Netflix is also considering a free, ad-supported plan in selected markets. Management acknowledges that such an option could attract a new audience but might also draw some users away from paid subscriptions. The company does not plan to launch a free service in the near term.

Less data, more suspicion

Investors are concerned not only about weak viewing figures but also about Netflix’s gradual reduction in the amount of information it discloses. The company has stopped publishing quarterly subscriber numbers. Its What We Watched report, which provides data on film and series viewership, will now be released once a year instead of twice.

Netflix says it wants the market to focus on revenue and operating profit. However, the change came just as investors began paying closer attention to slowing engagement. According to Forrester, if viewing trends are genuinely healthy, the market needs more transparency, not less reporting.

Netflix’s attempt to acquire Warner Bros. streaming assets raised additional questions. The company eventually walked away when the price became too high, but investors viewed its interest in a major acquisition as a possible sign that it lacked enough internal ideas for growth. For years, Netflix had emphasized that it preferred to build its business rather than buy competitors.

Netflix remains the world’s largest paid streaming service and accounts for around 5% of global TV viewing. But its old growth model is starting to falter: price increases and advertising are lifting revenue, while viewers are returning less often for new seasons and newer formats have yet to deliver comparable viewing volumes. To restore market confidence, Netflix will need not only to increase profits but also to consistently produce shows that keep audiences engaged beyond a single season.

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