Netflix (NASDAQ: NFLX) is heading into its third-quarter earnings release after losing nearly a quarter of its market value in 2026.
The stock closed at $70.53 on October 16, down 24.8% year to date, as investors weighed slowing viewer engagement against continued revenue growth and the expansion of its advertising business.
The bearish sentiment comes as the streaming giant prepares to release its third-quarter 2026 results after the U.S. market closes on Tuesday, October 20. For context, Netflix reported second-quarter revenue of approximately $12.56 billion and earnings per share of $0.80.
In this case, analysts expect earnings per share of $0.82 on revenue of approximately $12.87 billion, representing year-over-year growth of 39% and 11.8%, respectively.
The revenue estimate is slightly above Netflix’s own forecast of $12.86 billion, while the company expects an operating margin of 33.2%, up from 28.2% a year earlier.
The company expects growth from membership gains, subscription price increases and advertising, targeting approximately $3 billion in ad revenue in 2026 after nearly doubling advertiser commitments during its U.S. upfront sales.
However, engagement remains a concern as U.S. viewers spend nearly twice as much time on YouTube as on Netflix, according to Nielsen data. Netflix has also cut approximately 1,000 jobs as it seeks to control costs, leaving investors focused on updates around advertising, content spending and live programming.
Options traders expect a sharp reaction to earnings, with pricing implying a move of approximately 9% in either direction. Based on the last closing price, that translates to roughly $64 on the downside or $77 on the upside.
Traders set Netflix price after earnings
To assess how Netflix stock might trade after the earnings report, Finbold examined Polymarket data, where traders have priced in different scenarios for the week ending October 23.
Traders assign a 68% probability to NFLX finishing the week above $70, while the probability of a close above $80 stands at 12%.
The market prices in an 89% chance of shares finishing above $60 and an 80% chance of closing above $50. The odds fall to 5% for the $90 threshold, while the $100 contract stands at 19%. The market assigns a 2% probability to shares finishing above $110 and 1% each for the $120 and $130 thresholds.
Meanwhile, the $10 and $20 thresholds each carry a 99% probability, while $30 stands at 98% and $40 at 82%. However, probabilities for $90 and $100 are inconsistent, as finishing above $100 would also satisfy the $90 threshold.
Overall, the market suggests traders are more confident in Netflix remaining above $60 to $70 than rallying beyond $80 by October 23.
A strong report and reassuring guidance could support a recovery, while disappointing results or weaker engagement trends could push shares lower.
Featured image via Shutterstock
