Netflix Co-CEO Signals Slower Growth Ahead of Earnings Report
Netflix announced a 6% workforce reduction and warned that subscriber growth is slower than desired, while maintaining its full-year revenue forecast.
Netflix said it will cut about 6% of its staff and its co-CEO Ted Sarandos noted that the company’s growth is not meeting internal targets. The comments came ahead of the firm’s earnings release, raising concerns among investors about the upcoming quarter.
Despite the layoffs, a memo seen by CNBC indicated that management still expects to meet its full-year revenue outlook of roughly 13%-14% growth, or about $51 billion. The company reported 13% revenue growth in its July earnings and has raised subscription prices across all plans this year.
Analysts highlighted that Netflix continues to invest heavily in original content and sports rights, and the firm aims to translate those expenditures into future subscriber and revenue gains.
The stock has fallen more than 25% this year, while the broader S&P 500 has risen about 13%, leading some investors to question the premium justified for the streaming service. Netflix now trades at a forward price-to-earnings multiple below 19, comparable to the S&P 500 average.
"We are on track to deliver our full-year forecast," the internal memo said.
The commentary noted that Netflix’s growth remains in double-digit percentages, suggesting continued consumer demand, though analysts cautioned that the company may need to adjust its strategy to sustain momentum.