Netflix shares plunged approximately 9% in after-hours trading Thursday following its Q1 2026 earnings release. While revenue of $12.25 billion beat analyst expectations, muted Q2 guidance of $12.57 billion fell short of estimates. The sell-off coincided with the announcement that co-founder and board chairman Reed Hastings will not seek re-election in June, marking the end of a 29-year chapter.
Netflix stock fell sharply despite a strong first-quarter earnings beat. Revenue reached $12.25 billion, surpassing the $12.17 billion consensus and growing 16% year-over-year.
Earnings per share were $1.23, nearly double the prior year’s figure. Net income hit $5.28 billion, aided by a $2.8 billion termination fee from the Warner Bros. Discovery deal.
Second-quarter revenue guidance of $12.57 billion disappointed investors by missing Wall Street estimates. The full-year outlook remained unchanged, applying further pressure to the share price.
The decline accelerated as markets processed the weak forecast alongside major governance news. Co-founder Reed Hastings confirmed he will not stand for re-election at the June annual meeting.
Hastings stated in the Q1 shareholder letter: “Netflix changed my life in so many ways, and my all time favorite memory was January 2016, when we enabled nearly the entire planet to enjoy our service.” Leadership asserted his departure was unrelated to the failed Warner Bros. Discovery deal.
Co-CEO Ted Sarandos stated: “Reed was a big champion for that deal. He championed it with the board. The board unanimously supported the deal. We had perfect alignment between management and the board.” The company confirmed its advertising revenue remains on track to double to $3 billion this year.
It is also in talks with the NFL to expand its streaming relationship beyond current Christmas Day games. Bank of America analyst Jessica Reif Ehrlich viewed recent price hikes as a validator of Netflix’s underlying strength.
