Key Takeaways
- Shares of Netflix tumbled approximately 9% during after-hours trading and early European sessions following disappointing second-quarter revenue and profit projections that fell short of analyst expectations.
- First-quarter performance exceeded forecasts — generating $12.25B in revenue versus $12.17B anticipated, with adjusted EPS reaching $1.23 compared to the $0.76 estimate.
- Second-quarter revenue forecast of $12.57B underperformed the $12.64B consensus; profit guidance of $0.78 per share trailed the expected $0.84.
- Reed Hastings, co-founder and board chairman, revealed he won’t stand for re-election once his current board tenure concludes in June.
- The streaming platform also delivered its first quarterly disclosure following the collapse of its Warner Bros. Discovery takeover attempt, which Paramount Skydance ultimately secured.
While Netflix delivered impressive first-quarter numbers, investors fixated on the company’s forward trajectory rather than its recent achievements. Shares plummeted roughly 9% in extended trading and early European markets after the streaming giant’s second-quarter outlook significantly undershot Wall Street’s projections.
First-quarter revenue reached $12.25 billion, surpassing the consensus forecast of $12.17 billion. Adjusted profit per share landed at $1.23 — substantially exceeding analyst expectations of $0.76. This represents a significant improvement from the $0.66 EPS recorded in the same period last year. These per-share metrics reflect the company’s 10-for-1 stock division executed in mid-November.
However, the second-quarter outlook triggered the stock’s decline. The company projected Q2 revenue of $12.57 billion, falling below Wall Street’s $12.64 billion expectation. Profit guidance of $0.78 per share also disappointed against the $0.84 consensus, while operating income projections of $4.11 billion came in substantially under the anticipated $4.34 billion.
Co-CEO Greg Peters attempted to reassure market participants during the earnings conference call. “Of course, it’s early in the year,” he stated. “There’s still plenty of time to go, plenty of work left to do.”
Bloomberg Intelligence analyst Geetha Ranganathan expressed skepticism. “This was supposed to be them telling us why they’re going to do just fine without Warner Bros. Discovery,” she commented, “and I’m not so sure that this report necessarily does that.”
Reed Hastings’ Board Departure
Alongside the financial disclosure, the company announced that co-founder and board chairman Reed Hastings will decline re-election when his directorship expires in June. Hastings orchestrated Netflix‘s remarkable evolution from a DVD rental-by-mail operation into the worldwide streaming powerhouse it represents today.
The company has not yet disclosed succession arrangements or identified a replacement.
Impact of Failed Warner Bros. Discovery Acquisition
This quarterly report marked Netflix’s first financial update since abandoning its pursuit of Warner Bros. Discovery. Paramount Skydance emerged victorious in that acquisition contest and assumed responsibility for the deal termination fee. Warner Bros. stakeholders are scheduled to vote on the $110 billion transaction next week.
CFO Spencer Neumann assured investors the abandoned acquisition wouldn’t substantially affect Netflix’s operating margin projections. “Some of our initially planned costs for the deal, they won’t fully materialize,” he explained, acknowledging that certain expenses were accelerated into 2026.
BMO Research analyst Brian Pitz suggested prior to the earnings release that concluding the WBD situation could enable investors to concentrate on Netflix’s fundamental operations and its expanding advertising-supported subscription offering.
The streaming service also implemented subscription price adjustments in early 2026 — marking the second increase within slightly over twelve months. The advertising-supported Standard package increased $1 to $8.99 monthly, while Standard and Premium plans climbed $2 to $19.99 and $26.99 respectively.
Bank of America analyst Jessica Reif Ehrlich characterized the price escalations as a “validator of Netflix’s confidence in their underlying strength and durability.”
BMO’s Pitz calculated the increases would generate approximately $1.5 billion in additional revenue for 2026, constituting 3.3% growth attributable to pricing adjustments alone.
As of 0603 GMT Friday, Netflix’s Frankfurt-traded shares declined 8.7%. The company’s New York-listed stock had appreciated roughly 15% year-to-date preceding this earnings announcement.
