Netflix shares fell 10% after the report. The service's founder will leave the board of directors

Shares of Netflix, the market leader in streaming video services, collapsed by about 10% in extended trading on April 16 after the main session closed. The price fell as low as $97 - after the main trading ended almost without dynamics at $107.68.

Netflix released its first quarter earnings on Thursday. In addition, the service announced that co-founder Reed Hastings will leave its board of directors after his term expires in June.

"Reed Hastings has informed us that he will not seek re-election to our board of directors when his current term ends at the annual [shareholder] meeting in June in order to focus on his philanthropic endeavors and other goals," the letter to shareholders reads.

Netflix's revenue in the first quarter rose 16% year-on-year to $12.25 billion. Wall Street, according to LSEG, expected revenue of $12.18 billion, CNBC writes. Net income nearly doubled year-over-year to $5.28 billion, or $1.23 per share. Earnings per share far exceeded analysts' expectations: they predicted $0.76. The company attributed the result to higher-than-expected operating income, as well as the receipt of compensation of $2.8 billion for the failure of the deal with Warner Bros. Discovery. The published report was the first after Netflix lost the battle for the assets of this company.

At the same time, the forecast for the second quarter disappointed investors, Bloomberg writes. The company expects earnings per share of $0.78, while Wall Street predicts $0.84. Netflix expects revenue to be $12.57 billion versus analysts' expectations of $12.64 billion, according to Bloomberg.

Netflix maintained its previous full-year revenue guidance in the range of $50.7 billion to $51.7 billion. The company expects sales to grow 13% in the second quarter and again warned that content spending will be concentrated in the first half of the year due to the release schedule. Netflix also noted that the second quarter will see the highest rate of growth in content amortization in 2026 before declining in the second half of the year.

Netflix reported that revenue and operating profit increased in the first quarter thanks to "slightly higher than planned subscription revenue," the company said in a letter to shareholders. In March, the company announced price increases for all subscription plans in the United States. "The recent price changes have been successful, reflecting the strong value we offer users," the company states.

Netflix also reiterated previously announced plans to reach $3 billion in ad revenue in 2026, which would mean double year-over-year growth, CNBC notes.

The company said the launch of video podcasts, as well as broadcasts of the World Baseball Classic tournament, helped its "key internal measure of engagement quality" reach a new record in the first quarter. Netflix is no longer releasing subscriber figures.

Despite the rejection of the WBD deal, its impact on the company's finances will continue this year, CNBC writes. Some of the previously planned expenses will not be fully realized, but some of the costs originally expected in 2027 will be carried forward to 2026, CFO Spencer Neumann said. The overall level of spending related to mergers and divestitures "generally remains within the same range as projected," he said.

Analysts before the publication of the report Netflix looked positively at the prospects of the company, follows from the data of MarketScreener. Thus, on April 14, MoffettNathanson raised its target price on the stock from $115 to $120, maintaining a "Buy" rating. KeyBanc on the same day raised the target from $108 to $115, maintaining an "above market" rating, tantamount to a buy advice. Deutsche Bank raised their target price on shares of Netflix from $98 to $100 on April 14, maintaining a "Hold" recommendation on the stock.

In total, according to MarketWatch, the company has 57 ratings from analysts, with 42 advising to buy the stock, 14 recommending to hold in the portfolio, and only one believing that the securities should be sold. The Wall Street consensus target price is $114.4 per share, up 6% from the stock's closing price on April 16.

This article was AI-translated and verified by a human editor