Netflix: good quarter, weak reaction
Netflix reported Q1 earnings with EPS of $1.23, up from $0.66 a year earlier, but its stock fell more than 10% in early trading after a softer Q2 forecast and the surprise exit of co‑founder Reed Hastings ( ). The company kept its full‑year 2026 revenue guidance unchanged at $50.7 billion to $51.7 billion despite the cautious near‑term outlook (variety.com).
Netflix delivered a profitable first quarter, but investors focused on a weaker spring outlook and sent the stock down about 10% before the market opened Friday. (cnbc.com) The company reported first-quarter revenue of $12.25 billion, up 16% from $10.54 billion a year earlier, and net income of $5.28 billion, or $1.23 a share, versus $2.89 billion, or $0.66 a share, a year ago. Netflix said the quarter included a $2.8 billion termination fee tied to its abandoned Warner Bros. Discovery transaction. (cnbc.com) What spooked the market was the next quarter. Netflix forecast second-quarter revenue growth of 13% and an operating margin of 32.6%, below the 34.1% margin it posted in the same quarter last year and slightly below Wall Street’s prior estimates. (variety.com) Netflix kept its full-year 2026 revenue forecast unchanged at $50.7 billion to $51.7 billion, even after a recent U.S. price increase and a new price increase in Spain. Co-Chief Executive Greg Peters said the company’s earlier annual outlook had already assumed pricing changes during the year. (variety.com) The company said second-quarter profit will be squeezed by higher content amortization, the accounting charge that spreads programming costs over time as shows and films are released and watched. Netflix said Q2 will have its highest year-over-year content amortization growth rate of 2026 before that growth slows to the mid-to-high single digits in the second half. (variety.com) The selloff also landed on a management surprise. Netflix said co-founder and chairman Reed Hastings will leave the board in June when his term expires, ending a 29-year run that began with the company’s founding. (cnbc.com) This was Netflix’s first earnings report since it walked away in February from its proposed acquisition of Warner Bros. Discovery’s streaming and film assets. Chief Financial Officer Spencer Neumann said some deal costs planned for 2027 will now move into 2026, even though the company no longer expects all of the original transaction expenses to materialize. (cnbc.com) Wall Street’s reaction was not uniformly negative. Wedbush kept an “outperform” rating and a $118 price target, while TD Cowen maintained a “buy” rating and a $112 target, arguing that advertising growth and the later impact of price increases could still lift results in the second half. (variety.com) That leaves Netflix in an unusual spot after April 16: stronger reported profit, unchanged full-year guidance, and a market that wanted a cleaner second-quarter setup. (cnbc.com)
