Netflix Reported Record Margins Even as US Growth Stalled. Is It Still Worth Owning?

NetflixNFLX has spent years as the subscription people forget they're paying for, and right now that habit is doing a lot of the heavy lifting. The streamer just posted a 34.6% operating margin, comfortably ahead of its own forecast. It pulled that off in a year when its US audience appears to have stopped growing.

Higher prices are carrying the quarter

Netflix's third-quarter revenue rose 11.8% to $12.87B, helped by membership growth and price increases introduced in March. Its operating margin reached 34.6%, ahead of expectations, although the company attributed part of that improvement to the timing of expenses.

Customers haven't pushed back much on the higher prices, either. Netflix said the response was consistent with previous increases, while earnings came in at 87 cents per share, beating analysts' expectations of 82 cents.

Its size helps keep costs manageable. With more than 325M paid memberships worldwide at its last disclosed count, Netflix can spread its content spending across a massive audience. That gives it an advantage over smaller rivals, but it doesn't solve the problem developing in its biggest market.

The part that should worry owners

The US is where the story gets harder. Netflix hasn't added a single net subscriber there in any month of 2026 through September, according to Antenna data cited by the Wall Street Journal.

Customers are also cycling through faster. US churn, the rate at which subscribers cancel, rose 16.6% from a year earlier in the third quarter, roughly double the pace of the prior three quarters, per Apptopia data reported by Reuters.

The people who stay are watching less, too. Jefferies estimates average monthly viewing per member fell to 49 hours in the first half of this year, down from 66 hours in the same stretch of 2023.

YouTube is the rival to watch. Nielsen data shows the platform now has nearly double Netflix's viewing time, as cheaper creator-led video keeps chipping away at premium scripted shows.

The backup plan has hit a speed bump as well. Netflix now expects roughly $2.7B in 2026 ad revenue, down from about $3B, after some ad features rolled out slower than planned.

Even the trophy shelf looks thinner. Netflix took home 16 Primetime Emmys this year, down from 30 in 2025 and its lowest haul since 2016.

Is Netflix still worth owning?

Netflix isn't ignoring the warning signs. The company cut around 1K jobs, representing roughly 6% of its workforce, and replaced longtime content chief Bela Bajaria with former Disney and Fox executive Peter Rice.

The full-year outlook held, with $51.1B of revenue guidance landing at the low end of the prior range. Free cash flow guidance slipped to about $12.0B from $12.5B, mostly because of a real estate deal expected to close in the fourth quarter.

Seaport Research cut its price target to $90 from $102 on Oct. 18 and kept its Buy rating. HSBC moved to Hold in September, and Wells Fargo remains at Underweight.

The market is pricing Netflix as if its American growth story is over. That leaves room for a business that turns 34.6 cents of every sales dollar into operating profit and still has live events and international markets to grow into.

Owning Netflix now means betting it can keep charging the same people more without losing them. Jefferies expects ad revenue to reach $7.5B by 2029, which gives the company a second way to earn from the members it already has.

Netflix has become a toll booth on the world's entertainment habit, and that's a business worth holding for as long as people keep driving through.