Growing competition and subscription fatigue have weighed heavily on Netflix, which has gone from a streaming winner to a stock underperformer.
Netflix stock inched lower on Wednesday following news that the streaming giant is cutting 6% of its workforce, with the teams most affected being product, tech, legal, and human resources.
Co-CEOs Greg Peters and Ted Sarandos said in an email to employees that was reviewed by Barron's that "our mission -- to entertain the world -- is ambitious, and delivering on it requires us to be disciplined about where we prioritize our people and resources."
Peters and Sarandos also said the company remains on track to deliver its full-year forecast and will continue to invest aggressively in areas that are expected to improve its service and drive growth and innovation.
The Wall Street Journal reported on the cuts, which were confirmed to Barron's by the company. Shares were down 0.2% to $70.29 on Wednesday.
These layoffs were the latest news to sting Netflix investors. The stock has dropped 25% this year and is on pace for its worst year since 2022 when it fell 51%, according to Dow Jones Market Data.
The stock's decline is a notable reversal from recent years and signals that investors are growing more concerned with the current streaming environment and Netflix's place in it.
In 2022, shareholders were worried that Netflix's growth had stalled. The company needed to shake things up if it was going to prove that it could continue to grow subscribers and revenue.
Netflix launched its lower priced ad-supported tier at the end of 2022. Then the company started to crack down on password sharing in spring 2023. The combination of these two decisions helped drive new subscriptions.
People kicked off of other's plans needed to make their own profiles to continue watching Netflix. Some investors were worried this would upset customers and hurt subscriber numbers, but the ad-supported tier gave customers an affordable avenue to get their own subscriptions, which ended up driving subscription growth.
Netflix stock rose 65% in 2023 and 83% in 2024 after those changes spurred growth.
Shares are now down 47% from their all-time closing high of $133.91 on June 30, 2025. Growth needs to continue, but investors seem stuck on how that will be possible.
The company is spending big on live and original programming to try to bring in new subscribers and keep old ones. But some shareholders are worried about losing viewership to competition as fellow streamers do the same. Netflix even tried to purchase Warner Bros. Discovery earlier this year in an effort to grow its business. They lost that bidding war to Paramount Skydance. That merger, creating Skydance, officially closed earlier this month.
In July, Netflix reported disappointing financial results. The company also said that it would start publishing its engagement report once instead of twice a year, increasing concerns that viewership is declining as competition heats up.
There's also the problem of subscription fatigue as some customers across the streaming space complain that it's become too complicated and expensive to subscribe to all the available streaming services.
Netflix reports earnings next week. It's an opportunity for management to explain how recent business decisions, including investing in content and this recent round of layoffs, are going to set the company up for success and position it to compete.
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