Netflix Inc. (NFLX) is having a rough Monday. The stock is down 2.14% to $76.49 as of publication, even as the broader market is mixed. The Nasdaq is up 0.14%, the S&P 500 is down 0.15%, and the Communication Services sector is off 0.7%. So what's dragging Netflix down?
The short answer: it's the hangover from the company's second-quarter earnings report, which came out back in July. The market is still digesting the soft guidance, and that's weighing on the share price more than the recent excitement around a certain billionaire investor.
Pershing Square's New Position
Last Thursday, there was a brief lift in Netflix shares when it was revealed that Bill Ackman's Pershing Square Capital Management had taken a new stake in the streaming giant. Ackman bought 3.15 million shares, which now make up 4.9% of Pershing Square's portfolio.
This is a notable move because Ackman previously exited Netflix in 2022, taking a $400 million loss. He had bought over $1 billion worth of stock at $400 per share and sold at $225 per share. Ouch. But now he's back, and Pershing Square is singing a different tune.
In a statement, Pershing Square said that "Netflix has since effectively won the streaming wars" and that the stock's "current valuation multiple represents a substantial discount." That's a pretty bullish take, but it hasn't been enough to keep the stock in the green today.
Q2 Revenue Misses, But EPS Beats
Let's rewind to July 16, when Netflix reported its second-quarter results. Revenue came in at $12.56 billion, which was a 13% increase year-over-year but still missed the Street consensus of $12.59 billion. Breaking it down by region:
- UCAN: $5.43 billion, up 10%
- EMEA: $4.03 billion, up 14%
- LATAM: $1.58 billion, up 21%
- APAC: $1.51 billion, up 16%
On the earnings side, Netflix delivered 80 cents per share, beating the Street estimate of 79 cents. View hours grew 2% year-over-year in the first half of 2026. Live programming accounted for 5% of 2026 content spend and 1% of view hours, while ad-related revenue is on track to top $3 billion for 2026.
Guidance: The Real Problem
The market's concern is all about the forward-looking numbers. Netflix is projecting third-quarter revenue of $12.86 billion, which would be 12% growth year-over-year, but that's below the Street's expectation of $13.01 billion. Similarly, the company expects Q3 earnings of 82 cents per share, lagging the consensus of 84 cents.
For the full year, Netflix narrowed its revenue outlook to $51 billion to $51.40 billion, from a previous range of $50.70 billion to $51.70 billion. The Street was looking for $51.41 billion, so the midpoint is just a hair below.
This conservative guidance is what's keeping a lid on the stock. Investors are worried that the growth story is slowing, even as the company makes strides in advertising and live programming.
Technical Levels to Watch
From a chart perspective, Netflix is trying to stabilize in the short term. The stock is trading above its 20-day simple moving average (SMA) of $73.25 and its 50-day SMA of $74.75. But it's still 7.9% below its 100-day SMA of $83.54 and 13.6% below its 200-day SMA of $89.04.
That setup — a short-term bounce inside a longer-term downtrend — often leads to choppy trading. And with the 20-day SMA still below the 50-day SMA, the bearish alignment suggests the trend is still down.
Key levels to keep an eye on:
- Resistance: $78.50
- Support: $71
So while Ackman's endorsement is a nice vote of confidence, the market is focused on the fundamentals. Netflix's next earnings report will be crucial to see if the company can beat its own conservative guidance and reassure investors that the growth story isn't over.
