Netflix Inc. (NASDAQ:NFLX) is laying off about 6% of its workforce, or roughly 1,000 employees, in its biggest round of job cuts since 2022. Most of the cuts will hit the product, tech, legal and human-resources teams, according to an internal memo seen by Reuters.
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The last time Netflix made cuts this large, the company was on the defensive. It cut about 450 jobs in two rounds in 2022 after losing subscribers for the first time in more than a decade. This time, management says the business is fine.
“Our business is strong and growing, and we remain on track to deliver our full year forecast,” co-CEOs Ted Sarandos and Greg Peters wrote in the memo, Reuters reported.
They added that Netflix will “continue to invest aggressively in high impact areas.” The company reports third-quarter results next week.
Growth Is Slowing
The stock tells a different story. Netflix shares are down about 25% so far this year.
Much of the selling dates back to July, when Netflix forecast another quarter of slower revenue growth and came in below Wall Street expectations.
The company guided for 12% revenue growth in the third quarter and narrowed its 2026 revenue outlook to $51 billion to $51.4 billion. Full-year growth of 13% to 14% would be down from 16.5% in 2025.
Sarandos has acknowledged the slowdown. At the Bloomberg Screentime conference last month, he said Netflix was “not growing as fast as I want,” according to CNBC.
Viewing Time Is Down
Engagement has become investors’ biggest concern. YouTube and TikTok draw viewers with free user-generated content, which gives both platforms a cost advantage over Netflix.
Wall Street has grown more cautious as engagement slows.YouTube reached a 14.2% share of U.S. TV viewing in July, while Netflix slipped below 8%.
HSBC analyst Mohammed Khallouf downgraded Netflix to Hold, arguing that YouTube’s gains are “increasingly coming at the direct expense of Netflix.”
Wells Fargo went further, cutting the stock to a sell-equivalent rating over a shortage of hit shows. The bank estimates that Netflix viewership in the first half of 2026 was down about 8% on an adjusted basis from the same period in 2023, according to CNBC.
Deutsche Bank analyst Bryan Kraft took the other side and upgraded Netflix to Buy. Kraft said engagement concerns are overstated because programming performance naturally moves in cycles.
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Protecting Margins
Spending is going up, which may explain the timing. Netflix expects content spending to rise 10% this year, CNBC reported, and reducing back-office and tech staff would help cover the gap.
Revenue is a separate problem. Netflix has added an ad tier, live programming and gaming, but the core subscription business could be nearing a ceiling.
“They haven’t been able to find like another line of major revenue,” eMarketer senior analyst Ross Benes told Reuters.
Bigger Rivals
Netflix’s competition also got bigger this month. On Oct. 6, Paramount closed its $110 billion acquisition of Warner Bros. Discovery, the assets Netflix bid for and lost earlier this year, creating Skydance Corp. (NYSE:SKYD).
Other media companies are cutting too. The Walt Disney Co. (NYSE:DIS) said last month it would lay off around 300 employees, mostly in HR and technology.
Netflix’s third-quarter print on Tuesday should show whether this round is routine belt-tightening or a sign of something bigger.
NFLX Stock Price Activity: Netflix shares are trading lower by 0.09% at $70.39 at the time of publication on Wednesday, according to Benzinga Pro data.
Photo: Shutterstock
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