Netflix shares tumbled nearly 10% on April 17, closing at $97.31 and decisively breaking below the 200-day moving average of $105.88. The sell-off was triggered not by weak past performance, but by a cautious forecast for the current quarter, delivered in the same week the company confirmed the end of an era with founder Reed Hastings’ departure.
The streaming giant reported robust first-quarter results for 2026. Revenue climbed 16.2% year-over-year to $12.25 billion, slightly ahead of the $12.18 billion analysts had anticipated. However, the headline earnings figure of $1.23 per share, which handily beat expectations, was inflated by a one-time payment. Netflix received a $2.8 billion settlement from Warner Bros. Discovery after the latter exited a bidding process. Stripping out that effect, adjusted earnings per share were approximately $0.70, a solid increase from $0.66 in the prior-year period but not the outlier the raw number suggested.
Operating income reached $3.96 billion, with gross profit at $6.36 billion, both meeting market forecasts on a normalized basis. The company’s net income nearly doubled to $5.28 billion, largely due to the special payment.
Investor focus, however, was squarely on the road ahead. For the second quarter, Netflix guided to revenue of $12.57 billion and earnings per share of $0.78. Both figures fell short of Wall Street’s expectations for $12.63 billion and $0.84, respectively. This guidance miss overshadowed the maintained full-year outlook, which calls for revenue between $50.7 billion and $51.7 billion, an operating margin of 31.5%, and free cash flow of around $12.5 billion.
Amid the earnings noise, Netflix is negotiating a major real estate play. The company is in talks to acquire the historic 55-acre Radford Studio Center in Los Angeles for a reported price between $330 million and $400 million. The studio, where iconic series like “Gunsmoke” and “Seinfeld” were filmed, last sold in 2021 for $1.85 billion to Hackman Capital Partners and Square Mile Capital Management. After a $1.1 billion mortgage default, the property was taken over by Goldman Sachs, which is now dealing with Netflix. The potential purchase price represents a discount of roughly 80% from the 2021 valuation.
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Concurrently, Netflix is pushing forward with product evolution and monetization. By the end of April 2026, it plans to launch a vertical video feed within its mobile app, allowing users to swipe through short clips from movies, series, and video podcasts. The feature, reminiscent of TikTok or Instagram Reels but contained within Netflix’s ecosystem, will be powered by AI for personalized recommendations.
The advertising business is accelerating into a key growth engine. Over 60% of new subscribers in ad-supported markets are opting for the cheaper plan, and the number of advertising partners has surged 70% to over 4,000. Following a price adjustment in March 2026 that set the U.S. ad-supported tier at $8.99 and the premium plan at $26.99, Netflix confirmed its goal to double ad revenue to approximately $3 billion for the full year.
The quarter also marks a definitive leadership transition. Reed Hastings, the co-founder and longtime CEO who stepped down from that role in 2023, will not stand for re-election to the board at the June annual meeting. This ends his formal 29-year tenure, spanning the company’s journey from DVD mailer to global streaming leader. Co-CEO Ted Sarandos dismissed speculation that Hastings’ exit was linked to the failed Warner Bros. Discovery deal, stating Hastings was a “strong proponent” of the transaction which had unanimous board support. A board refresh is planned in the coming months.
Wall Street’s view remains largely constructive despite the stock’s slide. JPMorgan rates the equity “Overweight” with a $118 price target. The analyst consensus sits at “Moderate Buy” with an average target of $114.85, implying significant upside from the current price of around $93.63. Analysts like Wedbush’s Alicia Reese acknowledged the weaker Q2 guide but noted the maintained annual targets point to strength in the latter half of the year.
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