Netflix is set to kick off the new earnings season by releasing its second-quarter financial results on Thursday.

While the streaming giant's recent reports have been largely uneventful, this one could be different. The company's stock has been on a downward trend, with investors growing increasingly concerned about its future growth trajectory.

Data from market platform Koyfin indicates that Netflix (NFLX) shares still command a significant premium over traditional entertainment companies like Disney on most valuation metrics. The stock remains well above the lows hit during the 2022 sell-off triggered by a sudden growth slowdown. However, the share price has fallen 44% since reaching its all-time high around this time last year, even as the S&P 500 index has gained 22%. The key question is: why?

Longtime industry observers will recall that the initial catalyst for the sharp decline was the company's unexpected move to explore acquiring Warner Bros. Discovery's film and streaming assets. Despite a competing, higher bid from David Ellison of Paramount-Skydance, Netflix ultimately walked away from the deal. The entire episode left Wall Street with the impression that management was worried about long-term growth prospects. (Co-CEO Ted Sarandos has denied this, stating on the last earnings call, "We are confident in our core business.") Although the stock rebounded significantly after the Warner Bros. Discovery deal fell through, those gains were quickly erased following the release of Netflix's first-quarter results.

The Q1 report showed actual performance exceeding prior expectations, with revenue growing 16.2% year-over-year, nearly a full percentage point above market forecasts. However, investor attention was squarely focused on the company's guidance for second-quarter revenue growth, which was projected to slow to 13.5%. The full-year revenue growth forecast of 12% to 14% is also below last year's 15.9%, even with its nascent advertising business expected to grow rapidly. An undeniable reality is that Netflix's core business is maturing. Future growth will increasingly depend on raising prices for subscribers while hoping to capture a meaningful share of the advertising market. Meanwhile, formidable competitors like the newly consolidated Paramount-Warner Bros. Discovery and Disney continue to chip away at Netflix's market position.

A recent media report last week further heightened investor concerns, revealing significant viewer attrition for the second seasons of several Netflix series. Older viewers might recall the traditional TV era, where a hit show like "Seinfeld" could build momentum through word-of-mouth after its first season. In today's landscape of abundant streaming choices, replicating that kind of sustained success is far more difficult. The proliferation of streaming services and the ease with which users can cancel subscriptions present a challenge for all players in the industry, and the leader, Netflix, is not immune.