Netflix Cuts 1,000 Jobs and Swaps Its Content Chief Days Before Earnings

Netflix Cuts 1,000 Jobs and Swaps Its Content Chief Days Before Earnings

Netflix reports third-quarter results after the market closes on Tuesday, Oct. 20, and the numbers are likely to be the easy part. The harder questions start after them.

The deepest cut since 2022

On the morning of Oct. 14, co-CEOs Ted Sarandos and Greg Peters told employees in an email that Netflix would eliminate about 1,000 jobs, roughly 6% of its global workforce, its largest single round of cuts since 2022, when about 450 people went across two rounds. A memo obtained by Variety put the heaviest losses in product, technology, legal and human resources; Vulture reported that film, television, marketing and live-attractions teams were also affected. Netflix had about 16,000 full-time employees at the end of 2025, according to regulatory filings cited by The Hill.

Disciplined about where we prioritize

The memo offered no operational detail beyond a rationale. "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. Netflix has not disclosed a severance charge, a savings target or the earnings impact. A month earlier, Sarandos told Bloomberg's Screentime event that "we're not growing as fast as I want us to," then added: "The business is great and growing fine."

Bajaria out, Rice in

A day after the layoffs, Netflix said chief content officer Bela Bajaria would leave after a decade at the company, with Peter Rice, former chairman of Walt Disney Television, taking over on Oct. 26. Bajaria joined in 2016 and became CCO in January 2023, overseeing Bridgerton, Squid Game, Adolescence, Beef, Stranger Things, Wednesday, KPop Demon Hunters and Frankenstein, and pushing Netflix into live events and sports through deals with the NFL and WWE. Rice was ousted at Disney in June 2022 by then-CEO Bob Chapek; before that he ran Fox Searchlight and Fox Networks Group.

Engagement is the real problem

Apptopia data show US churn rose 16.6% year over year in the third quarter, roughly double the pace of the previous three quarters, while downloads in the US and Canada fell 20%. Jefferies estimates average monthly viewing per member fell to 49 hours in the first half of 2026 from 66 hours in the first half of 2023. Netflix says viewers watched more than 97 billion hours in the first half of 2026, up about 2% year over year: more hours in total, fewer per member. YouTube, TikTok and the 2026 World Cup absorbed attention, and analysts say this year's slate is weaker than 2025's.

Advertising: $3 billion, still 6% of sales

Advertising is the most credible second engine. Netflix expects ad revenue to roughly double to about $3 billion in 2026, with more than 4,000 advertisers, up 70%, and 250 million monthly active viewers on its ad tier as of May. Even so, $3 billion is only about 6% of annual revenue. Jefferies sees ad revenue reaching $7.5 billion by 2029; Wedbush warns the ramp may take longer than expected.

A stock down 22% and a divided Street

Netflix closed at $72.61 on Oct. 15 and opened at $69.87 the next morning, last trading around $71. The stock is down 22.56% year to date, against a 13.18% gain for the S&P 500, and 39.66% over twelve months; its 52-week range runs from $65.08 to $124.86. Jefferies issued a Buy rating and an $85 target on Oct. 15. Wedbush kept Outperform but cut its target to $90 from $105; BMO went to $125 from $135; Rosenblatt stayed neutral at $75; Huber Research double-downgraded to Underweight with a $70 target. The average Street target is about $92, roughly 27% above the current price and a measure of how little agreement there is.

Tuesday's numbers matter less than guidance

Guidance calls for $12.86 billion in revenue, up 11.7%, a 33.2% operating margin and $0.82 in earnings per share. The consensus of 35 analysts is $12.88 billion and $0.82, with pre-tax profit of $4.13 billion, up 33%, according to LSEG data cited by IG. Full-year revenue is guided to $51.0 billion to $51.4 billion at a 31.5% operating margin, with about $12.5 billion of free cash flow. The implied fourth quarter is $13.3 billion to $13.7 billion, or 11% to 14% growth. Investors will also want the 2027 slate, which Oppenheimer counts at 36 sequels and 55 non-sequel titles, and any sign that price increases can lift revenue without accelerating churn.

What the cuts actually change

A thousand departures mean the same product, legal and content work with fewer people. For creators, a change at the top may mean fewer, bigger bets. For advertisers, the question is whether the ad build-out keeps pace. Netflix also shut Night School Studio in August and plans to close Moonloot in Helsinki, and it walked away from Warner Bros. Discovery, collecting a $2.8 billion breakup fee after Paramount closed its $110 billion takeover on Oct. 6, a payment that briefly sent Netflix shares up 14%. The cash is real. The growth story is the part still waiting for a script.