Shares of Netflix fell sharply on Thursday after the company announced that co-founder and chairman Reed Hastings will step down, even as the streaming giant reported better-than-expected first-quarter results.
The stock declined around 8% in after-market trading after the announcement, reflecting investor concern over leadership changes at a time when the company is navigating a competitive streaming landscape and recalibrating its growth strategy.
Hastings to step down after nearly three decades
Netflix said Hastings will not stand for re-election at its annual meeting in June, marking the end of a 29-year tenure at the company he co-founded. In a letter to investors released Thursday, the company said Hastings plans to focus on philanthropy and other pursuits.
The leadership transition comes shortly after Netflix exited a high-profile bidding war for Warner Bros. Discovery, a deal ultimately won by Paramount. The company reiterated that the acquisition had always been a “nice to have, not need to have” opportunity.
Netflix emphasized that its long-term strategy remains intact. “No other entertainment company has tried to program at this scale, for this many tastes, cultures, and languages,” the company said in its shareholder letter. “Warner Bros. would have been a nice accelerant for our strategy, but only at the right price.”
Earnings beat expectations despite strategic shifts
Despite the negative market reaction, Netflix delivered solid financial results for the first quarter. Revenue rose about 16% year-over-year to approximately $12.3 billion, exceeding analyst estimates of around $12.2 billion.
Earnings per share came in at $1.23, well above both the year-ago figure of 66 cents and analyst expectations of 76 cents. The company modestly outperformed forecasts of $12.18 billion in revenue, signaling continued resilience in its core business.
However, Netflix issued a softer outlook for the current quarter, forecasting earnings per share of 78 cents, below Wall Street expectations of 84 cents.
The results follow a period of uncertainty tied to the Warner Bros. bidding process, which had weighed on investor sentiment due to concerns about potential debt from a large acquisition.
Growth strategy focuses on engagement and monetization
Looking ahead, Netflix said it remains focused on expanding engagement and diversifying its content offerings. The company highlighted investments in newer formats such as video podcasts and live entertainment, including events like the World Baseball Classic in Japan.
It also plans to leverage technology to improve user experience and boost monetization. Advertising remains a key growth driver, with the company expecting ad revenue to reach $3 billion in 2026—roughly double the prior year.
Netflix has also taken steps to strengthen its revenue base by raising subscription prices earlier this year, increasing its standard ad-free plan by $2 to $20 per month.
As the streaming industry continues to evolve, the company said it sees opportunities through producing, licensing, and partnerships, while benefiting from the ongoing shift away from traditional linear television.
While Hastings’ departure marks the end of an era, Netflix’s latest results suggest the company is maintaining operational momentum—even as investors weigh leadership changes and the path forward.
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