Netflix Inc. (NASDAQ:NFLX) is trending Wednesday after the company announced it is cutting about 1,000 jobs, roughly 6% of its workforce, less than a week before it reports third-quarter earnings on Oct. 20.
- Netflix stock is trading at elevated levels. What’s the outlook for NFLX shares?
Netflix Cuts About 1,000 Jobs, Its Biggest Layoffs Since 2022
Co-CEOs Ted Sarandos and Greg Peters announced the cuts in a memo to employees Wednesday, after The Wall Street Journal first reported them. Most of the layoffs will affect workers in Netflix’s product, technology, legal and human resources teams. The final number is larger than the roughly 5%, or 850 jobs, that Puck reported last week.
“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,” the co-CEOs wrote, according to Variety.
It is Netflix’s largest round of layoffs since 2022, when it cut about 150 jobs in May and another 300 in June, roughly 3% of staff. Disney and Amazon have announced similar cuts in recent months.
The Cuts Come Days Before Earnings, With the Stock Down About 20% This Year
Netflix shares were down about 20% this year as of last week and have fallen more than 40% over the past 12 months. Investors have focused on slowing engagement, which rose only about 2% in the first half, according to Deadline, and on competition from YouTube. Three months ago, a soft third-quarter forecast sent the shares down 9%.
Netflix is due to report after the market closes on October 20. Analysts expect earnings per share of 82 cents and revenue of $12.88 billion, against company guidance of about $12.86 billion in revenue and a 33.2% operating margin. Last year’s third-quarter margin was held to about 28% by a one-time Brazilian tax charge, which makes this year’s comparison easier.
Analysts have been cautious going in. Morgan Stanley and Barclays lowered their price targets last week to $80 and $70, and Huber Research downgraded the stock to Underweight, according to Stocktwits. KeyBanc also cut its target on slower margin growth, though it believes Netflix can respond by adjusting content spending and controlling other costs.
Netflix Shares Trade Flat
NFLX Price Action: At the time of publication, Netflix shares are trading 0.20% higher at $70.32, according to data from Benzinga Pro.
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