Netflix Faces Its Toughest Year Since 2022: Evaluating the Viability of its Investment Thesis Following Recent Earnings

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Netflix Reports Q2 Earnings and Stock Reaction

Netflix (NASDAQ: NFLX) reported a slight revenue miss for Q2 2026 on July 16, with earnings of $12.56 billion, falling short of the $12.58 billion expected by analysts. Following the announcement, the company’s stock fell by 7.3% on July 17, and is down more than 26% year-to-date, marking its worst performance since 2022.

Despite the revenue miss, Netflix is on track to double its advertising revenue to $3 billion by the end of the year, with strong viewer engagement reflected in a 2% increase in viewing hours during the first half of 2026. The company maintains a solid operating margin of 33.4% and expects a margin of 31.5% for 2026, with projected annual free cash flow of $12.5 billion and revenue growth of 13% to 14% this year.

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