Netflix Cuts 1,000 Jobs as Stock Sinks 40%: Is a Bottom Near?

Netflix Trims 1,000 Jobs Ahead of Earnings

Streaming giant Netflix announced it is laying off roughly 1,000 employees. That represents about 6% of its total global workforce.

The timing of this announcement has caught many investors by surprise. The news came just six days before the company is scheduled to report its quarterly earnings.

Over the past year, Netflix shares have dropped about 41% in value. With the stock under pressure, investors are watching closely to see if the company might be approaching a price bottom.

Who Is Affected by the Workforce Reduction?

Co-CEOs Greg Peters and Ted Sarandos delivered the news to employees through an internal morning email.

The job cuts focus primarily on four operational divisions: product, technology, legal, and human resources.

This round of restructuring marks the company's largest single workforce reduction since 2022.

...delivering on it requires us to be disciplined about where we prioritize our people and resources

Why Cut Staff When Profits Remain Strong?

Interestingly, Netflix is not running at a loss. The company's underlying business model continues to generate substantial profits.

In its second-quarter letter, management projected 2026 revenue to reach between $51 billion and $51.4 billion. Netflix retains roughly 31.5 cents of every sales dollar as operating profit.

The main challenge comes from slowing user engagement. Total hours watched by members grew by just 2% in the first half of 2026 compared to the same period a year earlier.

At the same time, competition for viewer screen time is growing intense. Nielsen data cited by TheWrap showed YouTube captured 14.2% of US TV viewing in July, compared to 7.8% for Netflix.

Looking Back at the 2022 Layoffs for Historical Context

Market observers are looking back at 2022, the last time Netflix made major job cuts, to see how the stock reacted.

According to Yahoo Finance data, Netflix shares hit a split-adjusted low of $16.64 on May 11, 2022. The company then announced 150 layoffs on May 17, followed by roughly 300 more cuts on June 23.

By the end of 2022, the stock had rebounded by 77% from its May low point.

However, market analysts at The Motley Fool pointed out that the recovery was primarily driven by strategic business shifts—such as launching an ad-supported subscription tier and stopping password sharing—rather than the job cuts themselves.

Past performance of corporate equities or digital assets is not an indicator of future results.

Earnings Guidance and Technical Outlook

From a technical perspective, an early October stock analysis indicated potential signs of stabilization near the $68 level. Shares traded around $71 on Wednesday.

If Netflix delivers strong earnings results and proves its strategic shifts are keeping engagement steady, the stock could find a firm bottom near current levels. On the other hand, if market share losses to platforms like YouTube deepen or broader market conditions worsen, the stock could face further downside risks.

All attention now turns to October 20, when Netflix officially reports its quarterly results.

Company guidance projects third-quarter revenue to reach $12.86 billion, with earnings per share (EPS) anticipated at $0.82.