Netflix Reports Oct. 20. Its Stock Has Fallen After Each of Its Last 4 Reports.

Netflix (NASDAQ:NFLX) will report its third-quarter numbers after the market closes on Tuesday, Oct. 20. The past four times the streaming giant reported, its stock dropped the next trading day -- about 10% after its October 2025 update, 2% in January, 10% in April, and 7% in July.

Compounded, those four sessions alone cut about a quarter off the stock's value.

As I write, shares sit near $70. They're down 25% in 2026 and 44% below the 52-week high of $124.86 they hit last October. The stock has also fallen about 13% since the end of August, weeks before Netflix says anything about its third quarter.

Does a stock that's already lost so much still have expectations left to reset?

Image source: Netflix.

A streak of letdowns

The October 2025 drop was about margins. Revenue grew 17% year over year, in line with the company's forecast. But a charge of around $619 million linked to a dispute with Brazilian tax authorities pushed the operating margin down to 28%, far below the 31.5% management had guided for.

January's report was mainly about the year ahead. Netflix edged past its own fourth-quarter targets. But its 2026 forecast called for revenue growth of 12% to 14%, a step down from 16% in 2025. Its 31.5% operating margin target for 2026 also had around $275 million in acquisition-related costs built into it. And viewing hours from July through December grew just 2% from a year earlier, even as the company topped 325 million paid memberships.

April brought a strong first quarter, with revenue up 16% year over year and operating income up 18%. But the stock had gained around 26% between the January and April reports, and management's second-quarter forecast called for revenue growth to slow to 13%.

It also guided for the operating margin to drop to 32.6% from 34.1% a year before, as growth in content costs hit its peak for the year.

July's second-quarter results were in line with guidance. But the third-quarter forecast called for 12% growth, and Netflix narrowed its full-year revenue range, lowering the top end to $51.4 billion from $51.7 billion. It also said it would release its viewing-hours report once a year rather than twice.

The forecast did the damage

Just one of the four reported quarters was meaningfully below Netflix's own forecast. And that miss came from a charge the company said covered tax periods going back to 2022.

Showing how steadily growth has slowed, Netflix's forecast for next-quarter revenue growth has fallen at each of the past three reports -- 15% in January, 13% in April, and 12% in July.

Put another way, each of these reports told investors that growth was still decelerating. I think that, more than any one quarter's results, is what the stock has been repricing.

Management's full-year profit outlook hasn't budged, though. Netflix still expects its 2026 operating margin to hit 31.5%, two points above 2025's 29.5%, and it says that should boost operating income by over 20% this year.

What does Netflix need to show on Oct. 20?

The company's own third-quarter forecast is the obvious bar. It calls for revenue of around $12.9 billion, up 12% year over year, and an operating margin of 33.2% against 28.2% a year ago.

That margin jump could look better than it is. The year-ago quarter included the Brazilian tax charge, which Netflix said lowered its operating margin by over 5 percentage points. Take it out, and the forecast is about flat with last year's underlying margin, or slightly below it.

The bigger test on Oct. 20 is likely the fourth-quarter forecast. If the third quarter hits its target, Netflix's narrowed full-year range leaves room for fourth-quarter revenue growth as low as around 11%. A forecast near that end might be another step down, and the stock fell after each of the last three.

Is there still room for expectations to reset? Some, I think.

At around $70, the stock trades at about 18 times earnings, using the average analyst estimate for Netflix's 2027 profits. That price no longer assumes a return to the 18% growth Netflix posted in late 2025. But it arguably still assumes growth settles around 12% as profits keep rising, and a weaker fourth-quarter forecast may test that.

In the end four straight post-earnings drops have taken a lot of optimism out of Netflix's valuation. Still, the pattern has held all year. What the company says about the next quarter has counted more than what it just reported, and I'd want to see that fourth-quarter forecast before buying shares.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.