Netflix cut its 2026 ad revenue outlook to about $2.70 billion from roughly $3.00 billion as new ad products roll out more slowly than planned, and its shares, at $65.04, are down 30.63% this year, near their 52-week low. The latest quarter beat on EPS ($0.87 vs. the $0.82 estimate) with revenue up 11.8% to $12.87 billion, but guidance disappointed, with a fourth-quarter operating margin of 26.0% and a 2026 free cash flow forecast cut to about $12.0 billion. Of 51 analysts, 35 rate the stock Buy or Strong Buy, and the average target of $90.75 implies 39.5% upside, though BMO Capital Markets' Brian Pitz trimmed his target to $125.00 from $135.00. Management says the ad business is still growing over 80% this year and plans ad tiers in 15 new countries in 2027, while the company bought back $4.8 billion of stock in the quarter. Netflix's pending all-cash acquisition of Warner Bros. Discovery at $27.75 per share could add debt that pressures buybacks, while the S&P 500 is up 13.38% this year.
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