Netflix shares drop on slowing engagement, revenue growth

Netflix stock dropped more than five percent Tuesday afternoon after its quarterly earnings release failed to assuage investor concerns about a slowdown in viewer engagement and revenue growth.

"We know there’s some investor concern about our view hours growth," the company said in a letter to investors, referring to how the company measures engagement, and added that it was "confident" it could accelerate that growth.

The California-based streaming giant has struggled to meet investor expectations for several quarters as it faces competition from other streamers and forms of entertainment including gaming and sports.

Netflix "has underperformed significantly over the last 6-12 months" and investors are concerned "about soft engagement trends, decelerating revenue growth, a slower margin expansion outlook, and most recently content executive leadership changes," John Belton, a portfolio manager at Gabelli Funds, told AFP in a statement.

In its third quarter ending in September, Netflix recorded $12.87 billion in revenue and $3.7 billion in net income, above investor expectations, according to FactSet.

It did not provide overall figures for subscriber view hours in the quarter, but noted that in India the metric increased 24 percent compared to the same period last year.

In July, Netflix said subscribers spent 97 billion hours watching content in the first half of the year, a 2 percent increase over the first half of 2025.

It stopped reporting subscriber numbers in the first half of 2025.

Earlier this month, Netflix co-CEO Ted Sarandos acknowledged that the streaming giant's growth fell below expectations, adding that live shows could provide a welcome boost.

"Overall, we're not growing as fast as I want us to," Sarandos said during the annual Bloomberg Screentime conference in Los Angeles on October 1.

The company will also reportedly cut around 6 percent of its workforce, or 1,000 jobs, according to media reports.