Overview
- Shares fell after the report, with the stock below $100, as Morgan Stanley kept an Overweight rating with a $115 target and called the drop a timing issue tied to price hikes.
- Netflix beat expectations with $12.25 billion in revenue, up 16% year over year, and earnings of $1.23 per share.
- Part of the quarter’s profit was a one-time $2.8 billion termination fee linked to a scrapped Warner Bros. Discovery transaction.
- Management guided a lower second-quarter operating margin near 32.6% because content costs are being expensed faster, and its 2026 revenue and margin midpoints came in under Wall Street forecasts.
- The company reaffirmed 2026 growth and margin goals and raised free cash flow guidance to $12.5 billion, while co-founder Reed Hastings plans to leave the board in June.