Shares of streaming giant Netflix (NFLX) fell in after-hours trading despite reporting upbeat results for the first quarter of 2026. Alongside the earnings release, Netflix disclosed that its co‑founder and Chairman Reed Hastings will leave the company’s board in June 2026, ending his 29‑year run at the company. Q1 revenue rose 16% year-over-year to $12.3 billion and also beat expectations of $12.18 billion, thanks to stronger‑than‑expected membership additions, higher pricing, and favorable currency movements.
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Further, Netflix’s earnings per share came in at $1.23, which beat analysts’ consensus estimate of $0.76 per share and climbed 86.4% year-over-year. The jump was boosted by the $2.8 billion termination fee tied to the Warner Bros. (WBD) transaction, recognized in “interest and other income.”
Ad Business Continues to Grow
Netflix said its advertising business continues to scale quickly and remains a major focus for monetization. The company said its $8.99 ad‑supported plan stayed popular in Q1, making up more than 60% of all new sign‑ups in markets where ads are available.
Netflix now works with over 4,000 advertisers, up 70% from last year, and plans to roll out new tools in 2026 to help brands measure the impact of their campaigns using first‑party data.
With these improvements, the company expects its advertising revenue to reach about $3 billion this year, roughly double 2025 levels.
Netflix’s Guidance for Q2 2026
Looking forward, management has provided guidance for the second quarter of 2026. Netflix expects Q2 EPS of $0.78, compared with the consensus estimate of $0.84. Also, the company anticipates Q2 revenue of $12.57 billion. The analysts’ expectations stand at $12.64 billion.
In Q2, NFLX projects an operating margin of 32.6%, slightly below last year due to heavier first‑half content amortization tied to title timing. Margin expansion is expected to resume in Q3 and Q4.
Also, the company reaffirmed its full‑year guidance:
- Netflix’s 2026 revenue is expected to be in the range of $50.7 billion to $51.7 billion (12%-14% growth). Analysts expect 2026 sales of $51.38 billion.
- Operating margin of 31.5%, up from 29.5% in 2025
- A “rough doubling” of ad revenue
- Free cash flow is expected to be about $12.5 billion, up from the prior $11 billion estimate.
Is NFLX Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NFLX stock based on 30 Buys and nine Holds assigned in the past three months. Further, the average NFLX price target of $116.00 per share implies 8.19% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
