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But Netflix doesn’t get paid for hours. It gets paid for subscriptions and ads. And so far, I think the company is holding up better than the numbers suggest.
Image source: Alphabet.
YouTube keeps gaining
YouTube’s viewing rose 6% from June to July, according to Nielsen, while streaming overall climbed to 49% of all TV time.
Netflix’s own viewing is still growing, but far more slowly. Its members watched over 97 billion hours worldwide in the first half of 2026, up 2% from a year earlier. Nielsen’s Gauge only tracks the U.S., of course. But the global number suggests Netflix’s problem is more about YouTube growing faster than about people watching less.
Management, though, has pushed back on making too much of hours.
“[T]here is not a linear relationship between view hours and revenue and profit because all hours are not created equal,” co-CEO Greg Peters said on Netflix’s second-quarter earnings call in July.
Live events are his example. Netflix expects them to make up just over 5% of its content spending this year but only around 1% of viewing hours. Yet they produced six of the company’s 10 best days for new sign-ups in the last five years.
But co-CEO Ted Sarandos admitted at a Bloomberg conference this week, when asked about Netflix’s slower viewing growth, that “we’re not growing as fast as I want us to.”
Is it costing Netflix money?
Not much, at least not yet. Showing how stable the business still is, Netflix’s second-quarter revenue grew 13% year over year to $12.6 billion, and operating income climbed 11% to $4.2 billion. Netflix also hiked U.S. prices in March, its first increase there since January 2025. Its standard plan moved to $19.99 a month from $17.99. Management said the effect of its first-half price changes, including in the U.S., was consistent with past increases.
A streamer losing its grip on U.S. viewers might struggle to push through a $2 monthly increase on its standard plan. Netflix did it anyway. And it expects ad revenue to roughly double this year, to around $3 billion.
U.S. growth has slowed sharply
The place to check for damage is Netflix’s U.S. and Canada region, which includes the U.S. market the Gauge tracks. Revenue for the region climbed 18% year over year in the fourth quarter of 2025. Growth then fell to 14% in the first quarter of 2026 and 10% in the second, far below the company’s 13% overall rate.
Management said second-quarter growth in the region reflected just a partial-quarter lift from the latest price change. This should make the third quarter, which Netflix reports on Tuesday, Oct. 20, the first full quarter with the new U.S. prices in place.
Ads carry a risk, too. For parent Alphabet (GOOGL +1.55%)(GOOG +1.62%), YouTube’s ad revenue rose 13% year over year to around $11.1 billion in the second quarter — almost four times what Netflix expects its ads to pull in for all of 2026. And advertisers can viewers.
Expand
NASDAQ: NFLX
Netflix
Premium Feature
Moneyball Superscore
81/100
Today’s Change
(-1.16%) $-0.79
Current Price
$67.06
Key Data Points
Market Cap
$279BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.
Day’s Range
$66.75 – $67.87
52wk Range
$65.08 – $124.86
Volume
38.7M
Avg Vol
37.2M
Gross Margin
49.53%
Yet investors aren’t paying much for Netflix’s growth. Based on what analysts on average expect Netflix to earn over the next 12 months, s cost around 19 times earnings, in line with the S&P 500‘s (^GSPC +0.73%) forward price-to-earnings ratio of about 19. Put another way, Netflix is priced an average stock, though management expects operating income to climb more than 20% in 2026.
Does YouTube’s widening lead make Netflix stock a sell? I don’t think so. Netflix is losing ground in hours, yet its pricing and ad results haven’t ed that down. And at this valuation, much of the YouTube worry seems baked into the s.
What I’d watch on Oct. 20 is U.S. revenue growth. If it doesn’t rise with a full quarter of higher prices behind it, I’d take YouTube’s lead much more seriously.
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About the Author
Daniel Sparks is a contributing Motley Fool stock market analyst covering technology, industrials, financials, and consumer goods. Daniel is the owner and chief investment officer of Sparks Capital Management. He holds a master’s degree in business administration from Colorado State University. The Globe and Mail profiled him and his investing philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here’s how he is doing it.”
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