Netflix shares drop after weak forecast, Hastings exit
Netflix (NFLX) reported stronger-than-expected profits in the first quarter after it lost the battle for the acquisition of Warner Bros. Discovery (WBD) to Paramount Skydance (PSKY) and raised its subscription prices, News.Az reports, citing foreign media.
However, the stock fell 10% in premarket trading on Friday after second-quarter guidance disappointed investors.
The company also announced that co-founder Reed Hastings, who transformed Netflix from a mail-order DVD business into a global streaming giant, plans to leave the board in June once his current term expires.
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In the first quarter, Netflix reported revenue of $12.25 billion, compared with Wall Street expectations of $12.17 billion, according to Bloomberg consensus data. This marks a significant increase from $10.54 billion in the same period last year.
Adjusted earnings per share came in at $1.23, well above estimates of $0.76, compared with $0.66 in the same quarter a year earlier. The company also carried out a 10-for-1 stock split in mid-November.
Despite the strong Q1 results, Netflix’s second-quarter outlook fell short of expectations, raising concerns about growth momentum, according to Bloomberg Intelligence senior media analyst Geetha Ranganathan.
For Q2, Netflix expects revenue of $12.57 billion versus the $12.64 billion forecast by Wall Street. Earnings per share guidance of $0.78 also came in below the expected $0.84, while the company’s operating income outlook of $4.11 billion fell short of the $4.34 billion anticipated by analysts.
These weaker-than-expected projections weighed on investor sentiment despite the company’s otherwise strong quarterly performance.
By Nijat Babayev
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