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ETFs in Focus as Netflix Shares Tumble Amid Q3 Earnings Beat, Guidance Cut
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Key Takeaways
Netflix beat Q3 earnings estimates by 6.1%, but lowered 2026 revenue guidance.
NFLX cut its ad revenue outlook to $2.7 billion amid slower rollout of ad product capabilities.
Four ETFs offer Netflix exposure, with weightings ranging from 3.77% to 9%.
Shares of Netflix (NFLX - Free Report) dropped 5.3% yesterday despite the streaming giant reporting better-than-expected third-quarter 2026 earnings on Oct. 20, 2026. The dismal share price performance was primarily led by the company’s narrowed 2026 revenue guidance, which also fell short of Wall Street estimates.
With investors concerned that intensifying competition in content creation could weigh on Netflix's growth prospects, a fact acknowledged by its management as well, some may prefer to avoid direct exposure to the stock. These concerns are compounded by NFLX's reduced full-year revenue outlook for its ad business, which has been a key driver of top-line growth.
Against this backdrop, investors who remain confident in Netflix’s long-term trajectory might prefer exchange-traded funds (ETFs) over direct stock ownership. ETFs with heavy exposure to NFLX offer a balanced way to capture the company's growth potential while hedging against the single-stock volatility that often accompanies quarterly earnings.
Before diving into the specific ETFs, let us dig deeper into NFLX’s overall third-quarter performance.
A Brief Analysis of NFLX’s Q3 Results
Netflix’s third-quarter 2026 earnings beat the Zacks Consensus Estimate by 6.1%. Its revenues came in line with the consensus mark. The company reported double-digit year-over-year revenue growth, driven by higher subscription revenues stemming from membership gains and pricing increases, growth in advertising revenues and favorable foreign currency movements.
Geographically, the company witnessed solid growth in APAC, Latin America and EMEA regions, with a particularly strong slate observed in India, where its view hours rose 24% on an absolute basis, in the third quarter.
To expand the variety of its entertainment offering, Netflix is bringing more third-party content to its service in new ways and also broadening licensing. For example, NFLX partnered with Take-Two to unveil a sneak peek of the highly anticipated Grand Theft Auto VI in August. The company has a licensing deal with Disney that brings a variety of current and library series and films for its members, including all five Ice Age films.
As far as its shareholder-friendly moves are concerned, Netflix bought back 63.9 million shares for $4.8 billion, which marked the company’s largest quarter ever of stock repurchases. NFLX currently has $22.3 billion remaining under its existing share repurchase authorizations.
Looking ahead, Netflix now projects advertising revenues of approximately $2.7 billion, down from its previous forecast of nearly $3 billion, reflecting a slightly slower-than-anticipated rollout of certain advertising product capabilities.
Consequently, NFLX’s full-year revenue guidance is now 0.2% below the mid-point of its prior forecasted range.
Netflix also expects workforce reductions to weigh on its fourth-quarter 2026 results, with associated costs projected to reduce operating margin by approximately 120 basis points (bps).
This fund, with a market cap worth $603.9 million, provides exposure to 10 highly-traded growth stocks of next-generation technology and tech-enabled companies. Netflix accounts for roughly 9% of the fund’s shares.
This fund, with net assets worth $5.2 billion, provides exposure to 41 U.S. stocks in the Internet industry. Netflix accounts for 5.69% of the fund’s shares.
FDN charges 49 bps in fees.
Global X PureCap MSCI Communication Services ETF (GXPC - Free Report)
This fund, with net assets worth $132.8 million, provides exposure to 24 companies from the communication services sector. Netflix accounts for 4.23% of the fund’s shares.
GXPC charges 25 bps in fees.
Vanguard Communication Services Index Fund ETF Shares (VOX - Free Report)
This fund, with net assets worth $6 billion, provides exposure to 111 companies that provide communications services primarily through fixed-line, cellular, wireless, high-bandwidth, and/or fiber-optic cable networks. Netflix accounts for 3.77% of the fund’s shares.
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ETFs in Focus as Netflix Shares Tumble Amid Q3 Earnings Beat, Guidance Cut
Key Takeaways
Shares of Netflix (NFLX - Free Report) dropped 5.3% yesterday despite the streaming giant reporting better-than-expected third-quarter 2026 earnings on Oct. 20, 2026. The dismal share price performance was primarily led by the company’s narrowed 2026 revenue guidance, which also fell short of Wall Street estimates.
With investors concerned that intensifying competition in content creation could weigh on Netflix's growth prospects, a fact acknowledged by its management as well, some may prefer to avoid direct exposure to the stock. These concerns are compounded by NFLX's reduced full-year revenue outlook for its ad business, which has been a key driver of top-line growth.
Against this backdrop, investors who remain confident in Netflix’s long-term trajectory might prefer exchange-traded funds (ETFs) over direct stock ownership. ETFs with heavy exposure to NFLX offer a balanced way to capture the company's growth potential while hedging against the single-stock volatility that often accompanies quarterly earnings.
Before diving into the specific ETFs, let us dig deeper into NFLX’s overall third-quarter performance.
A Brief Analysis of NFLX’s Q3 Results
Netflix’s third-quarter 2026 earnings beat the Zacks Consensus Estimate by 6.1%. Its revenues came in line with the consensus mark.
The company reported double-digit year-over-year revenue growth, driven by higher subscription revenues stemming from membership gains and pricing increases, growth in advertising revenues and favorable foreign currency movements.
Geographically, the company witnessed solid growth in APAC, Latin America and EMEA regions, with a particularly strong slate observed in India, where its view hours rose 24% on an absolute basis, in the third quarter.
To expand the variety of its entertainment offering, Netflix is bringing more third-party content to its service in new ways and also broadening licensing. For example, NFLX partnered with Take-Two to unveil a sneak peek of the highly anticipated Grand Theft Auto VI in August.
The company has a licensing deal with Disney that brings a variety of current and library series and films for its members, including all five Ice Age films.
As far as its shareholder-friendly moves are concerned, Netflix bought back 63.9 million shares for $4.8 billion, which marked the company’s largest quarter ever of stock repurchases. NFLX currently has $22.3 billion remaining under its existing share repurchase authorizations.
Looking ahead, Netflix now projects advertising revenues of approximately $2.7 billion, down from its previous forecast of nearly $3 billion, reflecting a slightly slower-than-anticipated rollout of certain advertising product capabilities.
Consequently, NFLX’s full-year revenue guidance is now 0.2% below the mid-point of its prior forecasted range.
Netflix also expects workforce reductions to weigh on its fourth-quarter 2026 results, with associated costs projected to reduce operating margin by approximately 120 basis points (bps).
ETFs in Spotlight
MicroSectors FANG+ ETN (FNGS - Free Report)
This fund, with a market cap worth $603.9 million, provides exposure to 10 highly-traded growth stocks of next-generation technology and tech-enabled companies. Netflix accounts for roughly 9% of the fund’s shares.
FNGS charges 58 bps in fees.
First Trust Dow Jones Internet ETF (FDN - Free Report)
This fund, with net assets worth $5.2 billion, provides exposure to 41 U.S. stocks in the Internet industry. Netflix accounts for 5.69% of the fund’s shares.
FDN charges 49 bps in fees.
Global X PureCap MSCI Communication Services ETF (GXPC - Free Report)
This fund, with net assets worth $132.8 million, provides exposure to 24 companies from the communication services sector. Netflix accounts for 4.23% of the fund’s shares.
GXPC charges 25 bps in fees.
Vanguard Communication Services Index Fund ETF Shares (VOX - Free Report)
This fund, with net assets worth $6 billion, provides exposure to 111 companies that provide communications services primarily through fixed-line, cellular, wireless, high-bandwidth, and/or fiber-optic cable networks. Netflix accounts for 3.77% of the fund’s shares.
VOX charges 9 bps in fees.