Netflix shares slide to 52-week low after earnings miss, analysts cite long-term growth potential
Netflix reported Q2 revenue slightly below expectations and an operating margin dip, sending its stock to a 52-week low, while analysts point to a large untapped market and recent share buyback as positive signals.
Netflix posted second-quarter revenue of $12.56 billion, a 13% year-over-year increase but just under the $12.58 billion consensus estimate, and its operating margin fell to 33.4% from 34.1% a year earlier. The company forecast third-quarter revenue of $12.86 billion, modestly below Wall Street’s roughly $13 billion outlook, and revised its full-year revenue target to $51-$51.4 billion while maintaining a 31.5% operating-margin goal. Shares closed at $74.35, down about 44% from their June 2025 peak, and fell an additional 8%-9% in after-hours trading.
During the quarter, Netflix repurchased approximately $4.7 billion of its own stock, the largest quarterly buyback in its history. > "There’s still $27 billion left on the authorization," portfolio manager Eric Clark said, adding that the buyback sent a positive signal about management’s confidence.
Clark argued that quarterly volatility does not alter Netflix’s longer-term investment case, citing steady cash generation, improving margins and shareholder returns. He noted that the company has reached less than 45% penetration of its roughly 800 million addressable households and accounts for about 5% of global TV viewing, suggesting significant growth room.
Chief financial officer Spencer Adam Neumann said the firm does not manage on a quarter-to-quarter basis, emphasizing a goal of sustained revenue and profit growth. Co-CEO Ted Sarandos highlighted potential cost savings from artificial-intelligence tools, noting a recent documentary that used AI-enhanced footage produced twice as fast and at half the cost. Netflix plans to spend up to $20 billion on content this year.
Wedbush equity-research senior vice president Alicia Reese reaffirmed an outperform rating, projecting that higher ad loads, better targeting through Netflix’s in-house ad platform and live-sports offerings could double ad revenue to about $3 billion by 2026. She also cited low churn rates and upcoming short-form publisher deals as factors that may narrow Netflix’s engagement gap with platforms such as YouTube.