Netflix Stocks Slip Lower as Skydance Debt Sharpens Valuation Debate

Netflix plans to lay off 5% of its staff, or about 850 employees, as part of a restructuring, according to Puck News. The company's stock is down 20% year to date. A Netflix representative declined to comment. The layoffs are expected ahead of the company's third-quarter 2026 earnings report on October 20.

Netflix plans to lay off about 5% of its workforce, roughly 800 employees, with an announcement possible next week. This follows a weak Q3 forecast and comes ahead of its Q3 results on October 20. The company faces increased competition from YouTube and other media groups, while expanding into advertising and AI. Netflix's co-CEOs will discuss Q3 results on October 20.

Netflix (NFLX) reported a $2.8B termination fee in Q1 2026, boosting operating cash flow. Q2 revenue rose 13% and operating income increased 11%, but free cash flow fell 32.7% YoY due to higher content payments and taxes. The fee complicates cash flow analysis and valuation metrics.

Morgan Stanley reduced its Netflix (NFLX) 2027 price target to $80 from $83, citing near-term challenges but maintaining a Buy rating. The stock has dropped 23% this year due to stagnant engagement and increased competition. Analyst Sean Diffley expects double-digit revenue growth and margin expansion, noting Netflix's strong global audience and content budget.

David Ellison, son of Oracle co-founder, completed a $111B takeover of Paramount, merging it with Warner Bros. Discovery to form Skydance. The deal, facing legal and industry opposition, unites major film, TV, and streaming assets. Ellison plans significant content investment and cost cuts, aiming to avoid past merger pitfalls. The company has $86.8B in debt and faces integration challenges, with analysts expressing concerns about execution risks and financial burdens.

Netflix may cut 5% of its workforce, or about 850 jobs, as part of a restructuring, according to a report by Puck's Matthew Belloni. The announcement could come as early as October 12, 2026. Netflix declined to comment.