Netflix shares plunged nearly 10% in after-hours trading Thursday after the streaming giant issued disappointing second-quarter guidance and announced co-founder Reed Hastings will not seek re-election to the board in June. The sharp decline came despite first-quarter revenue beating analyst expectations, highlighting investor focus on future outlook over backward-looking results. The stock drop reflects mounting concerns over leadership transition and growth trajectory as Hastings prepares to depart.

Netflix Stock Drop, Hastings Exit, Earnings And Shares Decline

Q1 Beat, Q2 Guidance Fell Short

The Netflix earnings report 2026 showed Q1 revenue of $12.25 billion — above the $12.17 billion analyst consensus and also about 16% higher than the same quarter last year. Earnings per share came in at $1.23, nearly double the $0.66 from Q1 2025, though the $2.8 billion WBD termination fee did a lot of the heavy lifting there. Net income reached $5.28 billion.

And yet, Netflix stock falls didn’t wait for context. Q2 revenue guidance landed at $12.57 billion — short of Wall Street’s $12.64 billion estimate — and the full-year outlook held at $50.7–$51.7 billion with no upward revision offered, at the time of writing. The Netflix stock drop kept deepening through the evening as investors processed the guidance miss and the Hastings announcement at the same time.

CFO Spencer Neumann stated:

“Some of our initially planned costs for the deal, they won’t fully materialize. But also, some that we were planning to carry into ’27 were pulled forward into 2026. We’re still in the ballpark, frankly, of the total that we were projecting for M&A-related expenses in the year. There’s no material impact on our operating margin outlook.”

Netflix Stock Falls as Hastings Closes a 29-Year Chapter

The Reed Hastings Netflix exit landed in the same shareholder letter as the earnings results — which is also part of why the Netflix shares decline turned into a two-part story Thursday evening. Hastings co-founded Netflix back in 1997 and stepped down as co-CEO in early 2023, handing the role to Ted Sarandos and Greg Peters. He won’t stand for re-election at the annual meeting on June 4, 2026.

Hastings stated in the Q1 shareholder letter:

“Netflix changed my life in so many ways, and my all time favorite memory was January 2016, when we enabled nearly the entire planet to enjoy our service.”

On the investor call, Sarandos got a direct question about whether the Reed Hastings Netflix exit had anything to do with walking away from the Warner Bros. Discovery deal.

Co-CEO Ted Sarandos stated:

“Reed was a big champion for that deal. He championed it with the board. The board unanimously supported the deal. We had perfect alignment between management and the board on the Warner Brothers deal. That had nothing to do with it.”

Co-CEO Greg Peters had this to say:

“Reed will always be Netflix’s founder and biggest champion — he is a part of our DNA.”

Ads, Price Hikes, and What Netflix Stock Falls Mean for Q2

Beyond the governance news, Netflix also pushed forward on several growth fronts Thursday. The company confirmed ad revenue is on track to reach $3 billion in 2026 — a doubling year over year — and also said it’s currently in talks with the NFL to expand its relationship beyond the Christmas Day games it already streams. Earlier this year, Netflix also raised prices across all its plans, a move that Co-CEO Greg Peters called consistent with past increases in terms of member response.

Bank of America analyst Jessica Reif Ehrlich stated:

“Given the overarching concerns regarding engagement over the last 12-18 months, we view these increases as a validator of Netflix’s confidence in their underlying strength and durability.”

The Netflix earnings report 2026 also put global paid subscribers at 325 million as of January — a figure the company no longer updates quarterly. The Netflix stock falls seen Thursday reflect that double pressure: a guidance miss and a founding chapter closing at the same time. Netflix stock falls could ease into Q2 if ad growth hits its target and content spending eases in the second half, but the Netflix stock price right now also carries the weight of a major governance shift. Netflix stock falls remain the headline going into the next earnings cycle.