Netflix shares plunged in after-hours trading Thursday, sliding roughly 9% as of 5:26 p.m. ET, after the streamer released its first-quarter 2026 results and announced that co-founder and board chairman Reed Hastings will not stand for re-election in June. The sell-off came despite a revenue beat, underscoring how disappointed investors punished the company’s forward guidance more than they rewarded the quarter’s topline surprise.
The numbers: Q1 revenue was $12.25 billion, above the $12.17 billion analysts expected and up about 16% year-over-year. Reported EPS was $1.23, nearly double Q1 2025’s $0.66 — helped materially by a $2.8 billion termination fee from Warner Bros. Discovery — and net income reached $5.28 billion. Yet Q2 revenue guidance of $12.57 billion missed the Wall Street consensus of $12.64 billion, and full-year guidance remained unchanged at $50.7–$51.7 billion. Those forward-looking figures, combined with the governance news, drove the rapid and steep share decline.
Management framed the quarter and outlook: CFO Spencer Neumann said certain planned deal costs were pulled into 2026 even as others won’t fully materialize, and that there is “no material impact on our operating margin outlook.” The shareholder letter also disclosed Hastings’ intention not to seek re-election at the June 4 annual meeting. Hastings — who co-founded Netflix in 1997 and stepped down as co-CEO in early 2023 — reflected on the company’s global reach, noting his favorite memory was “January 2016, when we enabled nearly the entire planet to enjoy our service.”
On the earnings call, co-CEOs addressed the timing of Hastings’ exit and the Warner Bros. Discovery deal. Ted Sarandos said the board and management were “perfectly aligned” on that transaction and that Hastings’ departure was unrelated. Greg Peters added that Hastings will “always be Netflix’s founder and biggest champion — he is a part of our DNA.”
Growth initiatives and other highlights: Netflix reaffirmed that ad revenue is on track to reach $3 billion in 2026 — roughly double year-over-year — and said it’s in talks with the NFL to expand beyond the Christmas Day games it already streams. Management also pointed to price increases rolled out earlier in the year; Peters said membership response has been consistent with past hikes. Bank of America analyst Jessica Reif Ehrlich interpreted the price moves as a sign of Netflix’s confidence in its engagement and underlying durability.
Subscriber metrics and what to watch next: Netflix reported 325 million global paid subscribers as of January, a metric the company no longer updates quarterly. The immediate market reaction — a double whammy of a guidance miss and a founder stepping back — explains Thursday’s sharp sell-off. Analysts and investors will now be watching whether ad revenue growth meets the $3 billion target and whether content spending eases in H2; those outcomes could help calm shares heading into Q2.
Why crypto traders might care: large moves in mega-cap tech can ripple through broader risk markets, including cryptocurrencies, as traders reassess growth narratives and risk appetite. For market-watchers across equity and crypto desks, Netflix’s results and its governance shift are likely to be a headline into the next earnings cycle.
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