Netflix shares dropped after the streaming giant posted its slowest sales growth in three years and signalled another quarter of slowing expansion, adding to concerns about the company’s growth trajectory, according to Bloomberg report.Shares fell 4.8% in early New York trading on Wednesday. Netflix shares are down 30% this year, while the S&P 500 has gained 13%, highlighting the stock’s sharp underperformance against the broader market.Slower growth puts focus on Netflix’s outlookNetflix reported third quarter revenue of $12.9 billion, broadly in line with Wall Street expectations.

But its fourth quarter sales forecast of $13.4 billion fell short of analysts’ estimates, pointing to another slowdown in growth.Revenue growth, which reached 17.6% in the final quarter of last year, is now expected to ease to 11.5% in the fourth quarter. The company said weaker than expected advertising revenue was partly responsible, with the business now expected to generate $300 million less than previously forecast.Netflix did beat expectations on earnings, reporting 87 cents a share in the third quarter against analysts’ estimates of 82 cents.

Its fourth quarter operating margin forecast of 26%, however, reflects costs linked to recent job cuts.“I know we can do better,” Netflix Co Chief Executive Officer Greg Peters said on a call with analysts Tuesday. “That better is our upside.”Leadership shake up adds to growth concernsThe weaker outlook comes as Netflix reshapes its leadership and content strategy. Over the past week, Peters and co CEO Ted Sarandos have overhauled the company’s leadership, including the removal of Chief Content Officer Bela Bajaria and film chief Dan Lin.The moves followed Netflix’s decision to cut 6% of its workforce, or about 1,000 jobs, its biggest such reduction since 2022.Sarandos and Peters have also brought in Peter Rice, a veteran film and television executive, to replace Bajaria.

Sarandos said the company sees an opportunity to strengthen its content slate, particularly in the US.“We see an opportunity to take our slate to the next level, especially in the US,” Sarandos said.The pressure comes as Netflix faces questions over engagement and programming. The company has more than 325 million subscribers, but its US TV viewing share stands at 7.8%, compared with about 14% for YouTube, according to Nielsen.

Netflix viewers watched only 2% more programming in the first half of the year than a year earlier, Bloomberg reported.Netflix is now looking to boost engagement through live sports, podcasts and video games, while also expanding its catalogue through third party programming. (Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)