LOS GATOS, California, April 18, 2026, 08:31 PDT
Netflix Inc dropped 9.8% Friday, with investors shrugging off a first-quarter profit beat and news of co-founder Reed Hastings’ upcoming board departure, focusing instead on the streaming giant’s disappointing outlook for the second quarter. Growth concerns, not just past results, dominated the day.
Netflix’s forecast took on extra weight after the company stopped breaking out quarterly subscriber figures—now, investors are left to focus on growth in revenue, operating margin, and pricing. Despite a recent U.S. price hike, Netflix held its full-year guidance steady, a move that stoked skepticism about whether bullish hopes had gone too far.
This marks the first earnings reset since Netflix came up short on Warner Bros Discovery. That deal slipped away, and now with Paramount Skydance chasing a $110 billion buyout of the Hollywood studio, analysts are zeroing in on fewer drivers for Netflix: advertising, live programming, pricing decisions, and the upcoming content lineup.
Netflix reported first-quarter revenue up 16% to $12.25 billion, with diluted EPS jumping to $1.23 from 66 cents a year ago—a boost that included a $2.8 billion Warner Bros-related termination fee. The streamer left its 2026 revenue guidance unchanged at $50.7 billion to $51.7 billion and reaffirmed its operating margin target at 31.5%.
Netflix is guiding for $12.57 billion in revenue and 78 cents EPS for the second quarter—both missing the S&P Global Market Intelligence consensus, according to its earnings transcript. Co-CEO Greg Peters insisted there’s “plenty of room to grow.” His counterpart, Ted Sarandos, described the Warner Bros deal as “nice to have, not a need to have.”
U.S. price hikes have entered the spotlight. Netflix bumped its ad-supported tier up to $8.99 monthly, with the standard option hitting $19.99 and premium climbing to $26.99. The company’s goal: squeeze more revenue from each user, especially as signups flatten out in older markets.
On April 10, Hastings notified the company he won’t seek another term at Netflix’s 2026 annual meeting, according to a filing. He’ll keep serving as director and chairman until then. The company said the move isn’t related to any dispute.
Advertising stands out as the main variable here. Netflix reiterated its projection of around $3 billion in ad revenue for this year—about twice what it expects in 2025. The company is also ramping up live programming and experimenting with fresh formats, offering advertisers more than just the usual lineup of shows and movies.
Still, there’s a chance that neither ad dollars nor subscription hikes bridge the shortfall quickly enough. EMarketer’s Ross Benes put it bluntly: Netflix needs to “truly diversify away” from subscriptions. Matthew Dolgin at Morningstar flagged another snag—boosting revenue per user gets tricky if price hikes lose steam or if subscribers drop down to ad-supported tiers, cutting into what Netflix earns from its premium options. wtvbam.com
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