What Should Netflix Stock Investors Be Watching Now?

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Netflix (NFLX) stock has fallen 42.6% over the past year, trailing the S&P 500’s 15.3% return. The business has not stalled: management said on the company’s October 20 earnings call that it plans to deliver its full-year guidance. Yet the clearest risk to Netflix now comes from one part of the business where management itself reports delays. So what is running late at Netflix?

Netflix Says Some New Ads Products Are Running Late

On that call, management identified delays in the rollout and partner integrations for some of Netflix’s new ads products. The company is “a bit behind” its aggressive target for 2026, management added.

Management said the ads business is still growing fast, at over 80% in 2026, and said it is excited about its first expansion of ads countries since launch. The risk is therefore a business building more slowly than management planned, not one that is shrinking.

Netflix’s Ad Plan Still Earns Less Per Member

The gap in revenue per member between the ad tier and the standard plan without ads is narrowing, management said on the call, but it still holds back revenue growth in the near term. By management’s own account, then, the ad plan’s lower revenue per member weighs on revenue growth for now.

Revenue was $12.9 billion in fiscal Q3 2026, up 11.8% from a year earlier. Growth has slowed in each quarter since fiscal Q4 2025, when revenue rose 17.6%.

Shares now cost far less relative to earnings than they did a year ago. At the end of September 2025, Netflix traded at 48.8 times its earnings over the previous twelve months. A year later, that figure fell to 19.5, a level it had been below at only one quarter end since late 2016, in June 2022. At the October 26 close, the P/E was 17.9, under the S&P 500’s 22.9. That figure is helped by fiscal Q1 2026, when net income of $5.28 billion was above operating income of $3.96 billion.

How Worried Should Netflix Holders Be?

While holders have reason to watch closely, this looks like a slow risk rather than a sudden one. Management said churn, the share of members who cancel, improved from a year earlier in the third quarter both globally and in the United States. The delay sits in how much Netflix earns from advertising, not in whether members stay.

The risk matters because of where growth now sits. Management said its objective is to sustain double-digit revenue growth, and fiscal Q3 2026 growth is not far above that. With the P/E near the bottom of its range since 2016, the price appears to assume some of that slowdown already.

Revenue growth against a year earlier is the number to watch when Netflix reports in January 2027. Management plans to give its 2027 guidance in that report.

Is Too Much Of Your Wealth Riding On One Stock?

Netflix holders now have a new risk to watch. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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