Good morning. Netflix’s stock fell again after the streaming giant reported second-quarter earnings on Thursday, extending a selloff that has erased roughly a third of its value since April. While investors remain concerned about slowing engagement and a softer-than-expected outlook, analysts say the market may be overlooking the company’s long-term growth story.
For Q2, Netflix reported revenue of $12.56 billion, up 13% year over year but just shy of the consensus analyst estimate of $12.58 billion. It posted an operating margin of 33.4%, down from 34.1% in the year-earlier period.
The company forecasts Q3 revenue of $12.86 billion, slightly below Wall Street expectations of roughly $13 billion. It also updated its full-year revenue forecast to $51 billion to $51.4 billion and reiterated its 31.5% operating margin target. Netflix also said it would reduce the frequency of its viewing-hours transparency reports.
Shares closed on Thursday at $74.35—up 1% for the day but down roughly 44% from their June 2025 all-time high—before falling another 8% to 9% in after-hours trading following the release of the earnings report.
Despite the selloff, Netflix repurchased about $4.7 billion of stock during the quarter—its largest quarterly buyback on record.
For Eric Clark, portfolio manager of the LOGO ETF and CIO at Accuvest Global Advisors, that’s a sign management sees long-term value in the business.
“There’s still $27 billion left on the authorization,” Clark told CFO Daily in an email. “That’s the biggest quarterly buyback in history, so I’m happy to see they took advantage of the weakness. That’s what I was hoping and expecting them to do, and it sends a positive signal to me.”
Clark said quarter-to-quarter volatility doesn’t change Netflix’s longer-term investment case. After being largely left out of the AI-driven rally, he said, the company now looks increasingly attractive because of its steady cash generation, improving margins and shareholder returns.
“I think it’s more important to focus on what happens when we get into the fall and engagement starts to rise again,” Clark said. “We know they’re comfortable with ad revenue continuing to grow, and it’s a high-margin business with strong free cash flow generation and margins that are still gradually improving.”
On the earnings call, CFO Spencer Adam Neumann said Netflix isn’t managing the business on a quarter-to-quarter basis. “Our goal is to sustain healthy revenue and profit growth,” he said.
Neumann said Netflix still has significant room to grow, noting the company has penetrated less than 45% of its roughly 800 million addressable households worldwide and accounts for only about 5% of global TV viewing. He said those figures point to a large untapped market despite the company’s scale.
Netflix co-CEO Ted Sarandos also pointed to potential cost benefits from AI, Fortune reported. The American Experiment, a five-episode documentary, included 17 minutes of AI-enhanced footage that was produced “twice as fast and at half the cost,” Sarandos said. Netflix expects to spend up to $20 billion on content this year.
In a July 13 note, Wedbush SVP of Equity Research Alicia Reese reiterated an outperform rating, arguing that higher ad loads, improved targeting from Netflix’s in-house advertising platform, and live sports could roughly double ad revenue to about $3 billion in 2026 while supporting the company’s margin targets. She also said new publisher short-form deals launching Aug. 3 could help narrow Netflix’s engagement gap with YouTube.
Reese also highlighted subscriber retention. “Netflix’s churn rate remains among the lowest in the industry, so subscribers aren’t leaving over any single show’s decline,” she wrote.
Instead, she said, viewers are increasingly spreading their attention across YouTube, social media, free ad-supported streaming channels and podcasts rather than abandoning Netflix altogether.
“I always ask people what’s going to make them cancel their Netflix subscription,” Clark said. “Everyone still wants Netflix to do better, and I’d love to see them deliver higher-quality content.”
Have a good weekend.
Sheryl Estrada
Sheryl.Estrada@fortune.com
Leaderboard
Fortune 500 Power Moves
Christian (Chris) Lown has been appointed EVP and CFO of Allstate Corporation (No. 64), effective Aug. 3. Lown succeeds Jess Merten, who was named president of property-liability in October 2025 after serving as Allstate's CFO. John Dugenske, president of investments and corporate strategy, has served as interim CFO. Lown has more than 25 years of senior leadership experience. He joins Allstate from CoStar Group, where he served as CFO and led finance, investor relations, business development, and facilities. He previously served as CFO at Freddie Mac and Navient Corporation, following senior finance roles at Morgan Stanley and UBS.
Alexis Rollier was appointed CFO of PVH Corp. (No. 446), home to brands Calvin Klein and Tommy Hilfiger, effective in early September. Rollier brings more than three decades of experience. He joins PVH from Sephora, part of the LVMH Group, where he has served as global chief operating officer and global CFO since 2018. Before that, he held senior leadership roles at the company, including CFO for Europe and the Middle East, and CFO. Earlier in his career, he served as global CFO at Guerlain and held senior finance roles at Kingfisher and LVMH.
Every Friday morning, the weekly Fortune 500 Power Moves column tracks Fortune 500 company C-suite shifts—see the most recent edition.
More notable moves this week:
Erica Smith was appointed CFO of Klaviyo (NYSE: KVYO), an autonomous B2C CRM, effective Sept. 1. Smith will succeed Amanda Whalen, who announced in May her plan to step down as CFO. Whalen will remain employed with Klaviyo until Sept. 4, and will then move into an advisory role through November. Smith joins Klaviyo from CyberArk, recently acquired by Palo Alto Networks, where she previously served as CFO. At CyberArk and, earlier, at Demandware, she led investor relations programs, expanded sell-side research coverage, and guided both public companies through financings.
Robin Rossmann was promoted to CFO of CoStar Group, Inc. (Nasdaq: CSGP), a provider of online real estate marketplaces, effective July 31, succeeding Christian Lown, who is stepping down to pursue an opportunity outside the company's industry. Rossmann currently serves as CoStar Group's managing director for Europe, and is a member of the company's executive leadership team. Over the past decade with STR and CoStar Group, he has played a central role in launching CoStar Group products across global markets, executing and integrating acquisitions, scaling international operations and advancing strategic initiatives.
Anya Hamill, CFO of Laird Superfood, Inc. (NYSE American: LSF), will resign from her position, effective Aug. 31. Hamill’s resignation is not the result of any disagreement with the company, its management, or its board of directors. Laird Superfood has begun a search process for a new permanent CFO, including both internal and external candidates. The company does not expect this leadership transition to affect its previously announced financial guidance or ongoing business operations, according to the announcement.
Sarah M. Romano was appointed CFO of SS Innovations International, Inc. (Nasdaq: SSII), a developer of innovative surgical robotic technologies, effective Aug. 3. Romano brings more than two decades of experience. Most recently, she served as CFO of Vicarious Surgical, a robotic surgery company. Romano also previously served as CFO of Entero Therapeutics and Kiora Pharmaceuticals. She began her career as an auditor at PricewaterhouseCoopers.
Bob Fishman has been appointed interim EVP and CFO of Pentair plc (NYSE: PNR), a global water treatment company. Fishman's appointment follows Nicholas Brazis' departure from the company on July 10 to pursue another opportunity at a private company. Fishman originally joined Pentair in 2020 and served as the permanent EVP, CFO and chief accounting officer until March 2026. Brazis then served as CFO from March until July. Pentair has initiated a search to identify its next CFO.
Will Mudd was promoted to CFO of Guardian Pharmacy Services (NYSE: GRDN), one of the nation's largest long-term care pharmacy services companies. Mudd, who joined Guardian in 2012, was promoted to CFO after serving as senior vice president of finance, where he helped build Guardian's finance organization and played a key leadership role in the company's transition to the public markets.
Big Deal
Going deeper
Here are four Fortune weekend reads:
"Visa launches new platform to provide stablecoin services to more than 200 million merchants" —Camila Grigera Naón
"Warsh’s Fed plan means it’s time to read the bond market backwards, says Morgan Stanley chief—and it could be great news for borrowers and homeowners" —Eleanor Pringle
"Jeff Bezos’ Blue Origin is boosting employee pay to compete with SpaceX—but an advisor warns of ‘golden handcuffs’" —Sydney Lake
“Disney’s cruise ship fleet generated $3 billion in the last fiscal year—and the company plans to add 5 more in a $60 billion expansion” —Christian Sylt
Overheard
"The capacity to connect with people, sit through awkward small talk, or simply show up in person is a muscle that needs to be practiced, otherwise it weakens."
—Esther Perel, a psychotherapist and author, told Fortune in an interview.
