Netflix Lowers Advertising and Revenue Guidance Despite Record Margins, Sparking Share Sell-Off

Netflix shares have retreated roughly 50% from record highs as investors weigh conservative forward outlooks against strong current profitability. The company lowered its 2026 advertising revenue forecast to $2.7 billion from $3.0 billion and cut full-year free cash flow projections to $12.0 billion amid delayed ad-tech rollouts. Fourth-quarter revenue guidance was set at $13.44 billion, trailing analyst forecasts. The soft guidance overshadowed third-quarter results, where revenue rose about 12% to $12.87 billion, earnings per share beat expectations at $0.87, and operating margins expanded to 34.6%. In response to decelerating engagement, Netflix also cut 1,000 jobs.