Six days before releasing its quarterly earnings report, Netflix (NFLX.US) abruptly announced it would cut roughly 1,000 employees, a figure equal to about 6% of its total workforce.
Co-CEOs Greg Peters and Ted Sarandos led this organizational shakeup, the largest since 2022, aiming to respond to current market pressure by carefully allocating people and resources. The layoffs mainly affect the product, technology, legal, and human resources divisions, and Greg Peters and Ted Sarandos stressed the necessity of the move through an internal memo obtained by TheWrap.
Although the company's fundamentals remain solid, data compiled by Woofun AI shows Netflix (NFLX.US) is expected to generate revenue between US$51 billion and US$51.4 billion in 2026, with every US$1 of revenue producing 31.5 cents of operating profit, yet growth momentum has clearly weakened. Member viewing hours rose only 2% in the first half of 2026, while YouTube accounted for 14.2% of US television viewing in July, far above Netflix's (NFLX.US) 7.8%. Over the past year, $NFLX shares have fallen about 41%, as the market worries deeply about declining user engagement and intensifying competition.
Looking back, on May 11, 2022, Netflix (NFLX.US) shares dropped to a post-split low of US$16.64, and the company then cut about 150 and 300 positions on May 17 and June 23 respectively. By the end of 2022, the stock had rebounded 77% from that low, but analysis by The Motley Fool pointed out that the recovery was mainly driven by the cheaper ad-supported plan and the crackdown on password sharing, not by the layoffs themselves.
In the current predicament, Netflix (NFLX.US) is trying to streamline its structure by cutting costs, but stagnant user hours and YouTube's strong rise make it hard for workforce reductions alone to immediately turn around market sentiment. Looking ahead, an October 2 analysis by BeInCrypto noted that Netflix (NFLX.US) shares could show signs of a rebound around US$68, and on Wednesday the stock traded at about US$71. With the earnings release date of October 20 approaching, the market will focus on its third-quarter revenue forecast of US$12.86 billion and earnings per share of US$0.82. If the figures meet expectations, they may ease investor concerns about slowing growth; otherwise, the share price could remain under pressure.
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