Netflix surpassed Wall Street expectations for both earnings and revenue in its latest quarterly report, generating a revenue of $12.25 billion, a 16% increase compared to the same period last year. Diluted earnings per share reached $1.23, nearly double from the previous year. Analysts had forecasted earnings of 76 cents per share and total revenue of $12.18 billion, indicating a solid performance by the streaming giant.
However, despite the favorable financial results, Netflix shares took a significant hit in after-hours trading, plummeting by as much as 10%. This decline came as a surprise to many, particularly since the company’s shares had already seen a 15% gain in 2026. Historical trends show a pattern where strong earnings projections do not always correlate with an increase in share price immediately following their release.
One potential reason for the sell-off may stem from the announcement regarding Reed Hastings, co-founder and former CEO, who is set to leave the company’s board of directors later this year. Hastings’ departure marks a pivotal moment for Netflix, concluding a nearly three-decade journey that transformed the company from a DVD rental service to a global entertainment powerhouse. Since stepping down as CEO in 2023, Hastings has focused on philanthropic efforts and new business ventures, including real estate and a board role at AI firm Anthropic.
Further compounding concerns among investors is Netflix’s expectation of a 1.5% decline in operating margins for the upcoming April-to-June quarter. While the company reported an operating margin of just over 32% in the previous quarter, the announcement of a potential decrease may have prompted some shareholders to cash in their gains despite Netflix reaffirming its full-year guidance.
The company attributed its revenue growth to “slightly higher-than-planned subscription revenue.” Historically, subscriber numbers have been a critical driver for share price increases, but Netflix no longer discloses this data quarterly. In its previous earnings report, the company indicated it finished 2025 with over 325 million global subscribers.
In its quarterly report, Netflix also highlighted the impact of the World Baseball Classic, which attracted 31.4 million viewers in Japan. This event not only became the company’s top-ranked title in that region but also generated the largest single-day subscription signups in Japan, leading the country to outpace others in terms of Netflix’s subscriber growth in the quarter.
Recently, Netflix implemented another round of price increases, although the timing at the end of March meant these changes had minimal impact on the latest quarterly figures. While such price hikes often lead to temporary cancellations, the long-term financial benefits are seen as substantial, especially if some former subscribers can be persuaded to return through engaging new content.
The earnings report comes just as Netflix steps back from negotiating a deal to acquire Warner Bros. Discovery’s studio and streaming unit, a move that has left Paramount set to acquire WBD for an eye-popping $111 billion, debt included.
Netflix’s earnings results mark the beginning of the latest earnings season for the media and tech sector, with major players like Comcast scheduled to release their first-quarter results shortly, followed by Disney and Paramount in early May.
