3 Reasons Why Netflix Has a Lot to Prove on July 16

Despite what the stock price has done this year, there's a lot to like about Netflix (NASDAQ: NFLX) as a long-term investment.

It has new revenue opportunities through video podcasting and gaming units, and its entertainment venue, Netflix House, is expanding from locations in Dallas and Philadelphia to Las Vegas in 2027.

For the rest of this year, however, it could still be a bumpy ride for investors, depending on what's reported on July 16 in Netflix's 2026 second-quarter earnings. That report will allow Netflix to show whether content costs are under control, what its acquisition strategy is, and whether the company can reassure shareholders enough to reverse recent stock price losses.

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Content costs

When Netflix reported its first-quarter earnings in April, a few things stuck out that weighed on the stock price immediately after the report. But one of the biggest worries from the market seemed to be Netflix's content costs.

The management team warned that a large portion of content costs would be front-loaded at the start of the year, and that its content amortization rate would peak in the second quarter of 2026.

Netflix's upcoming report will show whether that expectation held true or if the cost of that content is continuing to rise.

What's next after Warner

After Netflix walked away from a bidding war in February to acquire assets from Warner Bros. Discovery, investors initially cheered the move. That's because there were always questions about how much value Netflix could extract from Warner Bros., and finding out would have come at a hefty cost.

It didn't take long for Netflix to find another acquisition target. In March, the streaming giant acquired the filmmaking technology company founded by actor Ben Affleck, InterPositive, for a reported $600 million. More recently, in June, rumors surfaced that Netflix was interested in acquiring streaming software company Roku. However, Fox entered a definitive agreement to acquire Roku, and it seems unlikely Netflix would make a competitive bid.

Currently, there doesn't seem to be a unifying theme for the types of acquisitions Netflix is pursuing or may be interested in. More clarity from the management team on the acquisition strategy would help shareholders better understand the company's long-term goals.

Slumping stock price

The biggest reason Netflix has a lot to prove in its upcoming earnings report is because of its slumping stock price. As of this writing, not only are shares down nearly 20% so far in 2026, but the stock price is down around 40% over the last 12 months.

Starting a position before earnings could lead to short-term gains if the report is positive, but it could just as easily lead to fast losses if the report is mediocre or disappointing.

For long-term investors, this will serve more as a scorecard: Has Netflix found its footing, with progress to build on, or is the company still stuck in a slump and facing more uncertainty ahead?

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix, Roku, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.