Gotrade News - Netflix shares plunged 9% in after-hours trading despite the streaming giant reporting Q1 2026 results that topped Wall Street expectations. The combination of disappointing Q2 guidance and co-founder Reed Hastings announcing his departure from the board triggered the selloff.
Key Takeaways
- Q1 revenue reached $12.25 billion (up 16% YoY) with net income of $5.28 billion, well above analyst estimates
- Q2 guidance of $12.57 billion revenue and $0.78 EPS missed Wall Street consensus of $12.64 billion and $0.84 respectively
- Reed Hastings will not seek re-election as chairman at the June 4, 2026 annual meeting, ending a 29-year chapter
Netflix posted Q1 revenue of $12.25 billion, beating the analyst consensus of $12.17 billion and marking 16% year-over-year growth. Earnings per share came in at $1.23, nearly double the $0.66 reported in Q1 2025.
Net income surged to $5.28 billion, partly boosted by a $2.8 billion termination fee from Warner Bros. related to the failed Paramount Skydance acquisition. The results put Netflix in its strongest financial position ever.
However, it was the second-quarter outlook that triggered the stock decline. Netflix projected Q2 revenue of $12.57 billion, below the analyst consensus of $12.64 billion.
The Q2 EPS forecast of $0.78 also missed the consensus estimate of $0.84. The company maintained its full-year revenue guidance of $50.7 billion to $51.7 billion without an upward revision.
Separately, Reed Hastings, who co-founded Netflix in 1997, announced he will not seek re-election as chairman. His departure from the board is scheduled for the annual shareholders meeting on June 4, 2026.
The decision marks the end of Hastings' 29-year direct involvement with the company he built. Hastings had already stepped down as co-CEO in early 2023.
On the advertising front, Netflix remains on track to hit $3 billion in ad revenue in 2026, doubling from $1.5 billion the prior year. Global paid subscribers have reached 325 million as of January 2026.
Co-CEOs Greg Peters and Ted Sarandos will continue leading Netflix operations going forward. Investors are now weighing whether the departure of the company's founding visionary will affect its long-term strategic direction.
Sources
- Watcher Guru, Netflix Stock Falls 9%, Co-Founder Reed Hastings Plans Board Exit, 2026
- Investing.com, Wall St futures steady after record highs; Netflix shares drop, 2026
