Netflix NFLX shares tumbled on Friday after the streaming giant delivered mixed second-quarter results and announced plans to provide less frequent disclosure of viewer engagement data.
This has increased concerns among investors who were already worried about slowing growth and rising competition.
The stock fell 8% on Friday, extending its decline for 2026.
Shares had already dropped 25% for the year as Wall Street grappled with questions about viewer engagement trends, competition from short-form video platforms, and the sustainability of Netflix’s growth trajectory.
The latest selloff came after Netflix reported revenue of $12.56 billion for the second quarter, narrowly missing analysts’ expectations of $12.58 billion.
The company also issued third-quarter revenue guidance of $12.86 billion, below Wall Street forecasts of $12.99 billion.
Reduced transparency raises investor concerns
Investor concerns were amplified by Netflix’s decision to further reduce the amount of operating data it shares with the market.
After discontinuing subscriber disclosures last year, the company announced that beginning in 2027 it will publish its “What We Watched” engagement report annually instead of twice a year.
Netflix said the move was intended to “keep the focus on our primary financial metrics – revenue and operating profit.”
The decision comes at a time when engagement metrics have become increasingly important to investors seeking evidence that Netflix can maintain growth amid intensifying competition.
The company reported that viewing hours increased 2% year over year during the first half of 2026.
However, concerns remain over its share of the broader streaming market.
According to Nielson’s data, Netflix’s share of US streaming has declined to 17% from 21% in the 2 year period till March 2026.
Morningstar analyst Matthew Dolgin said the reduction in engagement reporting could reinforce investor fears.
“The prevailing narrative is that Netflix’s business is deteriorating. Management’s decision to pull back on its engagement report should only encourage this thinking. We believe this is the biggest reason for the high-single-digit stock decline after hours.”
MoffettNathanson analyst Robert Fishman also highlighted concerns about the relationship between engagement and financial performance.
There’s a “negative narrative that if viewing hours are set to decline, then revenue and profits must quickly follow,” Fishman said.
Competition and engagement trends remain under scrutiny
Netflix continues to face growing competition from platforms such as TikTok, YouTube and Instagram, which have gained traction through short-form video content and mobile-first experiences.
Investors have increasingly focused on whether declining engagement could eventually weigh on revenue growth and profitability.
Executives sought to reassure investors during the earnings call, pointing to ongoing membership growth, positive responses to recent price increases, and strong performance from several series and films.
The company also emphasized its global growth opportunity, noting that it remains present in less than 45% of addressable households worldwide.
Co-Chief Executive Officer Greg Peters pushed back against the assumption that viewing hours directly determine financial performance.
“There is not a linear relationship between viewers and revenue and profit, because all hours are not created equal,” he said.
Peters noted that live programming can generate advertising revenue and drive subscriber growth despite accounting for a relatively small share of viewing hours.
Advertising and international growth offer support
Despite investor concerns, Netflix highlighted several areas that could support future growth.
The company said advertising revenue is expected to roughly double this year to approximately $3 billion. It is also exploring new initiatives including live entertainment, games, podcasts and shorter-form video content.
Morningstar maintained its $80 fair value estimate on Netflix and argued that the market reaction may have been excessive.
“The stock is reasonably valued for the cash generation and growth it has. It is now trading below 20 times expected 2026 earnings, and we expect profits to continue growing at a faster pace than revenue each year.”
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