Netflix shares fell over 9% after co-founder Reed Hastings announced his departure from the board. It has raised concerns about leadership continuity and investor sentiment in the competitive streaming industry. The departure was revealed in the company’s first-quarter earnings report published on Thursday (April 16, 2026).
Reed Hastings, the co-founder and chairman of Netflix, is leaving the company’s board when his term expires this summer. Hastings is stepping aside to focus on “philanthropy and other pursuits,” the company said in a letter to shareholders. Hastings will officially leave the board when his term is up in June, according to the filing.
“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,” Hastings said in a statement included in the earnings report.
“My real contribution at Netflix wasn’t a single decision,” Hastings continued. “It was a focus on member joy, building a culture that others could inherit and improve, and building a company that could be both beloved by members and wildly successful for generations to come.”
In 1999, when mom-and-pop video rental stores still coated the country, Hastings and Netflix co-founder Marc Randolph launched a subscription DVD-by-mail business for movies. In the coming years, Netflix expanded its offerings from a disc-delivery service to digital delivery. The company officially retired its disc-delivery service in 2023.
Under Hastings’ leadership, Netflix became a pioneer in the streaming industry. It has inspired a wave of similar services from Amazon, HBO, Disney, Hulu, and others.
“Reed built a culture of innovation, integrity, and high performance that defines who we are today,” the company said in the earnings report. “His vision and leadership pioneered how the world is entertained, and his legacy and impact are not only felt by all of us at Netflix, but by audiences around the world,” the report added.
The outgoing founder also thanked Ted Sarandos, the company’s CEO, and Greg Peters, its co-CEO.
The company reported $12.25 billion in revenue in the first quarter, a 16.2% increase from the same period last year. Netflix’s net income rose nearly 83% to $5.28 billion. Despite beating revenue and earnings estimates, Netflix shares fell nearly 9% in after-hours trading, with reports pointing to investor caution around guidance and the concurrent announcement that Reed Hastings will step down from the board in June.
Netflix shares climbed after it stepped away from the bidding for Warner. Analysts noted that money it saved could be invested in audience-drawing shows and its potentially lucrative advertising business.
"Netflix won with investors when it lost Warner Bros Discovery," said Emarketer senior analyst Ross Benes. "Netflix's next challenge will be to truly diversify away from having subscriptions account for almost the entirety of its revenue," Ross added.
“The streamer's advertising platform continues to grow, and the company expects it to account for $3 billion in revenue this year,” according to Peters.
"As the company enters a new era without Reed Hastings, advertising will play a bigger role," Benes said.
Netflix is also pushing further into live sports, podcasts, and games, executives said on an earnings call. The recently streamed World Baseball Classic was a hit on Netflix, according to co-chief executive Ted Sarandos.
Netflix entered exclusive talks to acquire Warner Bros. in 2025, when the studio and streaming assets were in a deal valued at around $72 billion (about $82.7 billion including debt). However, the transaction turned into a bidding war after Paramount Skydance made a rival all-cash offer for the entire company. In February 2026, Warner Bros. Discovery’s board deemed Paramount’s revised $31-per-share bid superior, triggering a window for Netflix to match the offer.
Netflix declined to raise its bid, saying the deal was “no longer financially attractive,” effectively walking away and clearing the path for Paramount to proceed with the acquisition.
In its shareholder letter, Netflix said Warner Bros. “would have been a nice accelerant for our strategy, but only at the right price.”
He said the exercise helped Netflix build its “M&A muscle” and sharpen its investment discipline. “When the cost of this deal grew beyond the net value to our business and to our shareholders, we were willing to put emotion and ego aside and walk away,” Sarandos said.
Also Read: Best Movies Based on True Stories on Netflix to Watch in 2026
Netflix announced that it is looking to expand into new technological frontiers, including generative AI. The report also mentions the streaming giant’s recent acquisition of InterPositive, Ben Affleck’s AI company.
The company kept its full-year guidance unchanged at revenue of $50.7 billion to $51.7 billion and an operating margin of 31.5%. It also said diluted EPS of $1.23 in Q1 was helped by the Warner Bros.-related termination fee, which was recognized under “interest and other income.”
Netflix said it now expects free cash flow of about $12.5 billion in 2026, up from its earlier projection of $11 billion, primarily because of the after-tax impact of the termination fee.
On the earnings call, CFO Spencer Neumann said Netflix had already factored in about $275 million of M&A-related costs in its original 2026 guidance, and that these costs were not solely tied to Warner Bros.
Netflix's continued focus on its ad-supported tier is expected to drive strong growth in 2026, along with crackdowns on password sharing aimed at boosting revenue. Despite a cautious near-term outlook, long-term projections suggest continued revenue growth through 2030.