Netflix shares fell sharply Friday after the streaming company posted first-quarter results that beat Wall Street forecasts but left its full-year outlook unchanged, a signal investors read as caution after months of price increases, ad-tier expansion and takeover drama around Warner Bros. Discovery.
The stock closed at $97.31, down 9.8%, wiping out roughly $44 billion in market value in one session. Netflix reported revenue of $12.25 billion, up 16% from a year earlier, and diluted earnings per share of $1.23, helped by a $2.8 billion termination fee tied to the failed Warner Bros. transaction.
The market reaction turned on what came next. Netflix kept its 2026 revenue forecast at $50.7 billion to $51.7 billion and still expects operating margin of 31.5%, even after a March price hike in the United States. For the second quarter, the company projected 13% revenue growth and said content amortization will run hottest in the first half, a setup that points to margin pressure before easing later in the year.
Management told shareholders that Warner Bros. would have been “a nice accelerant” at the right price, while stressing that Netflix still sees several ways to grow through producing, licensing and partnerships.
That stance has split analysts. Reuters cited Morningstar’s Matthew Dolgin saying Netflix cannot keep lifting prices at recent rates every year, while Ross Benes of eMarketer argued the company still needs to reduce its reliance on subscription revenue and make advertising carry greater weight.
Netflix says ads revenue should roughly double in 2026, and investor John Belton of Gabelli Funds told Reuters the group is moving into another phase as a scaled global advertising platform. The company is also leaning harder into live programming, a push executives see as a fresh driver for engagement and ad sales.
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The selloff also landed hours after Reed Hastings said he would leave the board in June and step away from the company he co-founded 29 years ago. His exit adds a leadership marker to a tense stretch for Netflix, which had regained ground after walking away from the Warner Bros. bidding war in February. Investors praised that discipline at the time. This week they wanted clearer proof that Netflix can turn price hikes, ads and live events into its next stretch of sustained growth.
