2Q26 Recap: Searching for a New Growth Vector

Research evidence excerpt

2Q26 Recap: Searching for a New Growth Vector

USA | Media & Entertainment

Netflix EquityJulyResearch17, 2026

TARGET | ESTIMATE CHANGE2Q26 Recap: Searching for a New Growth Vector

Q2 results inline, but Q3 rev/OM guide below Street and FY OM reit despite RATING BUY

some expects for a raise. 2% y/y 1H26 hours not enough to disprove bears, PRICE $74.35^

while 2H26 hours face tougher comp against strong 2H25 content slate. Net/ PRICE TARGET | % TO PT $90.00 ($110.00) | +21%

net, this print fueled the bear case as growth slows, expenses ramp, and 52W HIGH-LOW $127.75 - $70.86

engagement weakness persists, while new initiatives (eg podcasting, games) FLOAT (%) | ADV MM (USD) 96.9% | 3,471.56

aren't meaningful enough to drive a new growth vector. Reit Buy and PT to $90 MARKET CAP $321.0B

from $110. TICKER NFLX

^Prior trading day's closing price unless otherwise

noted.

What we liked:

Q2 rev growth of 12% CC y/y was in-line with guidance, while 33.4% OM continued NFLX's FY (Dec) CHANGE TO JEFe JEF vs CONS•

pattern of OM beats. Overall, Q2 results were inline and consistent with the recent trend of 2026 2027 2026 2027

revenue landing near expectations and margins modestly outperforming. EBITDA NM <-1% NM NA

1H26 engagement hours grew 2% y/y despite World Cup and Olympics competition. While REV* NM <-1% NM NA•

not particularly strong, the result was better than some feared. That said, it likely still implies a

y/y decline in hours per sub, and 2H26 engagement will face tougher comps against a strong 2026 ($) Q1A Q2A Q3 Q4 FY

2H25 content slate that included Stranger Things and Squid Game. REV* 12,249.8 12,559.9 12,860.5 13,499.8 51,170.0

Repurchased $4.7bn of stock in Q2, the largest quarterly buyback in company history. PREV 12,574.5 12,938.9 13,513.2 51,276.3•