Netflix experienced a significant drop in its stock price, with shares falling 9% in extended trading following the release of its first-quarter earnings. The streaming service reported a revenue of $12.25 billion, exceeding analysts’ expectations of $12.18 billion, and marking a 16% increase from $10.54 billion in the same quarter last year. The company’s net income reached $5.28 billion, or $1.23 per share, nearly double the $2.89 billion, or 66 cents per share, reported in the previous year.
This earnings announcement followed Netflix’s decision to abandon its proposed acquisition of Warner Bros. Discovery’s streaming and film assets earlier in February. Despite the deal falling through and the impact from a $2.8 billion termination fee, Netflix maintained its full-year revenue guidance of $50.7 billion to $51.7 billion. The company anticipates a 13% revenue growth for the second quarter and noted that content spending would be heavily skewed towards the first half of the year.
Additionally, Reed Hastings, co-founder and current chairman of Netflix, will depart from the board in June when his term ends. Hastings stepped down as CEO in 2023, passing leadership to co-CEOs Greg Peters and Ted Sarandos. While questions arose about the connection between Hastings’s exit and the abandoned WBD deal, Sarandos clarified there was no link.
Netflix aims to achieve $3 billion in advertising revenue by 2026, significantly expanding its ad-supported tier. Increased subscription prices and measures against password sharing are part of the company’s strategy to boost subscriber counts, with recent price adjustments aligning with their annual plans. Live sports, including discussions with the NFL for potential future collaborations, are a growing focus for the platform.
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