Where we heard itCNBC interview after Netflix’s Oct. 20, 2026 third-quarter report. Speaker: Simon Gallagher, principal at SPG Global and a former Hulu and Netflix executive.
NetflixNFLX shares fell to a two-year low after slower growth and an advertising forecast cut, according to The Northeast Times. The stock closed at $65.04 on Oct. 21, down 5.3% on the session and 47.6% over the past year. Simon Gallagher, identified by CNBC as a principal at SPG Global and described by Bloomberg as a former Hulu and Netflix executive, traces the trouble to the company itself. “I do have a little bit of concern that there are some internal challenges,” Gallagher said on CNBC.
CNBC reported Oct. 20 that Netflix beat third-quarter earnings estimates, but shares fell on advertising and revenue guidance. GAAP EPS of $0.87 exceeded the $0.82 consensus, and revenue of $12.87B rose 11.8% year over year.
Ad Miss Puts Product Delays in the Spotlight
The Next Web reported Netflix cut its 2026 ad sales target to $2.7B and forecast a weak fourth-quarter profit. Per the CNBC segment, that amounts to a 10% cut, and Netflix cited delayed app releases as a factor. In its third-quarter shareholder letter filed with the SEC, Netflix attributed the reduction to a slower-than-expected rollout of ad product capabilities.
Co-CEO Greg Peters told analysts “we have seen some delays in the rollout and partner integrations for some of those new ads products,” while adding “We are still growing our ads business over 80% this year.”
Ads became the growth area because the cheaper ad tier lets Netflix sign price-sensitive viewers and then earn more from each hour they watch. Peters said the revenue gap between ad-tier and standard members “is narrowing, and that gap means under-realized revenue growth for us in the near term.” The ad tier extends to 15 new countries in 2027, starting in March 2027.
Subscribers Held Up and Shielded Netflix Until Now
Gallagher argues steady membership numbers kept these issues out of view. “It was a real positive in previous earnings where everyone’s been encouraged by that. That’s been the growth area. But they were protected in some way because there wasn’t any softening on the subscriber numbers.”
That buffer remains in place. Netflix’s shareholder letter said third-quarter churn worldwide and in the U.S. improved year over year and “was better than forecast.”
Third quarter and the outlook
Missing Water Cooler Hits Leave a Gap
A “water cooler” show is one so widely watched that people discuss it at work the next day. Gallagher says Netflix has lacked one. “There hasn’t been that iconic water cooler conversation type programming, and they need to find their way back to that, particularly with the challenge that’s going to be coming from Skydance and their associated companies.” Skydance now controls Paramount, operating as Paramount SkydancePSKY.
Management granted the point. Co-CEO Ted Sarandos said “We do need better execution in the U.S.,” as Peter Rice joins as chief content officer. LightShed Partners’ Rich Greenfield said on CNBC that “there has been no breakout global hit during this calendar year.”
Growth Company or Mature Company?
Per the CNBC segment, revenue growth is expected to slow for a fourth straight quarter. Netflix guided fourth-quarter revenue to $13.44B, up 12%. Gallagher worries about the label that could follow. “I would hate to see them viewed as that type of a company. I still would love to see them as the innovative company that really changed the way that we all consume media.”
Per the segment, he sees opportunities in live sports events and premium user-generated content. Netflix’s live slate already includes an NFL Thanksgiving Eve game, a Christmas Day doubleheader and Tyson Fury vs. Anthony Joshua.
What Investors Should Track Before the January Outlook
The stock trades at a P/E of about 19, and Netflix bought back 63.9M shares for $4.8B last quarter, with $22.3B left under its authorizations. Roughly 1,000 job cuts will weigh on fourth-quarter operating margin by about 120 basis points.
Barron’s Jack Hough reads Charter’s low earnings multiple as a warning sign.
- Ad tech timing: whether delayed products and partner integrations ship ahead of the 2027 country launches.
- Hit content: whether Rice’s slate produces a global breakout in the U.S.
- Subscriber trends: whether churn stays low as pricing and the ad tier develop.
CFO Spence Neumann said 2027 guidance would come in January, the next checkpoint for all three.
Netflix stock has fallen after six straight earnings reports, its longest losing run since at least 2004
The next-day move in Netflix shares after each of its 89 quarterly reports since 2004. The coral dots are the last six.
Gallagher’s view leaves investors with a focused question. If Netflix’s problems are product delays and a thin hit slate, the fixes sit inside its own walls: shipping ad tools on schedule and making shows people talk about.
Gallagher sees Netflix’s trouble as self-made: ad tools that shipped late and no show everyone is talking about. Steady subscribers have covered for that so far. The risk is that revenue growth keeps cooling, from 17.6% a year ago to an 11.5% forecast this quarter, and investors start pricing Netflix as a mature company.