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Stock Market Today, Oct. 20: Netflix Q3 Revenue Rises 12% on Pricing Power

The Motley Fool·10/20/2026 21:09:01

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Key Points

Netflix shares slipped 1.7% in regular trading on elevated volume and dropped another 5.1% immediately after releasing its third-quarter report.
Third-quarter revenue rose 12% year over year to $12.9 billion, while diluted earnings jumped from $0.59 to $0.87 per share, beating guidance across the board.
Management issued muted fourth-quarter targets, forecasting slower revenue growth and lower profit margins.
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Netflix (NASDAQ:NFLX), a global subscription streaming and live entertainment platform, closed at $68.66, down 1.70%. Investors were watching its after-close Q3 report, with ad growth and engagement metrics in focus.

Trading volume reached 51.3M shares, coming in about 47% above its three-month average of 34.9M shares. Netflix IPO'd in 2002 and has grown 57,289% since going public.

How the markets moved today

S&P 500 (SNPINDEX: ^GSPC) closed at 7,711, up 0.26%, while the Nasdaq Composite (NASDAQINDEX: ^IXIC) finished at 26,425, down 0.02%. In entertainment streaming services and digital media subscription platforms, Walt Disney (NYSE:DIS) closed at $111.65, up 1.88%, while Amazon.com (NASDAQ:AMZN) closed at $262.63, up 0.07%, giving Netflix a weaker showing than these industry peers.

After the closing bell, Netflix shares took a quick haircut. As of 4:31 p.m. ET, the stock was down by 5.1% as investors considered the Q3 2026 earnings report.

Large red Netflix sign outside a modern glass office building

Image source: Getty Images.

What this means for investors

Q3 revenue rose 12% year over year to $12.9 billion. Diluted earnings jumped from $0.59 to $0.87 per share. Netflix outperformed all metrics for which it provides quarterly guidance, with larger profit surprises than revenue surprises.

However, management's fourth-quarter guidance looked muted with slower year-over-year sales growth and lower profits. The lower Q4 margins will result from seasonal effects and impairment costs from the recently announced job cuts.

I thought Netflix stock looked undervalued before this report. Now, I see another discount piled on top of the existing rebates. The business itself is in great shape, and I expect the reorganization to do more good than harm in the long run.

Anders Bylund has positions in Amazon, Netflix, and Walt Disney. The Motley Fool has positions in and recommends Amazon, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.