FINANCENEWS: Netflix (NFLX) drops 9% in after-hours trading despite beating Q1 2026 earnings on both top and bottom lines, as weak forward guidance weighs on the stock.
Netflix reported its Q1 2026 results after the bell:
Revenue: $12.25B (actual) vs $12.18B (estimated)
EPS: $1.23 (actual) vs $0.76 (estimated)
The jump was boosted by the $2.8 billion termination fee tied to the Warner Bros. transaction, one of the biggest in the history of media mergers.
The primary driver of the sell-off appears to be weak forward guidance and concerns over the sustainability of its growth following the failed acquisition of Warner Bros.
Looking ahead to the second quarter, Netflix said it expects revenue growth of 13% and diluted earnings of $0.78 per share, below the $0.84 per share expected by Wall Street. Netflix reaffirmed its earlier annual revenue estimate of between $50.7 billion and $51.7 billion.
Following the collapse of the $72 billion Warner Bros deal, investors are scrutinizing Netflix's ability to maintain its dominant market share through organic content spending alone.
The market is wary of potential subscriber "churn" (cancellations) following the U.S. price increases implemented in March. While Netflix is trying to nudge users toward the ad-supported tier, the revenue from that segment is still considered small relative to its total valuation.
Alongside results, Netflix disclosed that its co‑founder and Chairman will leave the company’s board in June 2026, ending his 29‑year run at the streaming giant.