Netflix (NFLX) Shares Plunge 9% on Disappointing Q2 Forecast and Hastings Board Exit

Key Takeaways

• Shares of Netflix declined approximately 9% during after-hours trading and early European sessions following disappointing second quarter revenue and profit projections.
• First quarter performance exceeded expectations with revenue reaching $12.25B versus analyst estimates of $12.17B, while adjusted EPS came in at $1.23 compared to the $0.76 forecast.
• The company’s Q2 revenue forecast of $12.57B fell short of the $12.64B analyst consensus; projected EPS of $0.78 also missed the anticipated $0.84.
• Reed Hastings, co-founder and chairman, announced he will step down from the board when his current term ends in June.
• These results mark the streaming platform’s first quarterly report following its unsuccessful attempt to acquire Warner Bros. Discovery, which ultimately went to Paramount Skydance.

While Netflix delivered impressive first quarter results, investors focused sharply on future prospects rather than past performance. Shares tumbled approximately 9% in after-hours and early European sessions as the company’s second quarter outlook fell significantly below Wall Street expectations.

The streaming giant reported first quarter revenue of $12.25 billion, surpassing the consensus estimate of $12.17 billion. Adjusted earnings per share reached $1.23 — substantially exceeding the analyst forecast of $0.76. This represents a significant improvement from the $0.66 EPS reported in the same quarter last year. These per-share metrics reflect the company’s 10-for-1 stock split executed in mid-November.

Netflix, Inc., NFLX

However, the forward-looking projections for the second quarter triggered the sell-off. The company forecasted Q2 revenue of $12.57 billion, falling short of the Street’s $12.64 billion expectation. Projected earnings per share of $0.78 missed the $0.84 consensus, while operating income guidance of $4.11 billion came in well under the anticipated $4.34 billion.

Reed Hastings to Exit Board of Directors

Adding to the day’s news, co-founder and chairman Reed Hastings revealed he will not pursue re-election when his board tenure concludes in June. Hastings orchestrated Netflix‘s evolution from a DVD-by-mail service into the worldwide streaming powerhouse it represents today.

The company has not yet disclosed succession plans or named a replacement.

Impact of Warner Bros. Discovery Deal Collapse

These earnings represent the first quarterly disclosure since Netflix withdrew from the competition to purchase Warner Bros. Discovery. Paramount Skydance emerged victorious in that contest and committed to paying the associated breakup fee. Warner Bros. shareholders are scheduled to vote on the $110 billion proposal in the coming week.

BMO Research analyst Brian Pitz suggested prior to the results that distancing from the WBD transaction could allow investors to concentrate on Netflix’s fundamental business and its expanding advertising-supported subscription tier.

The streaming service also implemented subscription price increases in early 2026 — marking the second hike in just over twelve months. The ad-supported Standard plan increased by $1 to $8.99 monthly, while Standard and Premium options rose $2 to $19.99 and $26.99 respectively.

Bank of America analyst Jessica Reif Ehrlich characterized the price adjustments as a “validator of Netflix’s confidence in their underlying strength and durability.”

BMO’s Pitz projected the increases would generate approximately $1.5 billion in additional revenue for 2026, accounting for 3.3% growth from pricing changes alone.

As of 0603 GMT Friday, Netflix’s Frankfurt-listed shares were trading down 8.7%. Prior to the earnings release, Netflix stock in New York had gained roughly 15% year-to-date.

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