Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Reed Hastings, Netflix’s chair, will step down from the company he co-founded in 1997 and built from a DVD-by-mail service into a $450bn streaming giant.
The stock fell as much as 9 per cent in after-hours trading after Netflix announced Hastings’ plans to leave the board in June and a weaker than expected financial forecast.
The sell-off came despite strong first-quarter results that were boosted by the $2.8bn break fee it received from Paramount following its decision to withdraw its bid for Warner Bros Discovery.
Acquiring Warner Bros “would have been a nice accelerant for our strategy, but only at the right price”, Netflix said on Thursday.
Netflix reported earnings of $1.23 a share in the first quarter, well above Wall Street’s expectations of 76 cents. In addition to the boost from the break fee, it said its operating income was lifted by price increases that were rolled out in the quarter.
Revenue was better than expected at $12.3bn while net income was $5.3bn, boosted by the break fee.
However, Netflix projected earnings per share of 78 cents in the current quarter, less than the 84 cents Wall Street expected.
Netflix shares have regained some of the ground lost after entering the bidding war for Warner Bros. Ahead of the earnings report, its shares were up about 15 per cent this year but remain well below the high reached last summer.
The company said Hastings wanted to “focus on his philanthropy and other pursuits”. He began to pare back his responsibilities in 2020, when he appointed Ted Sarandos as his co-CEO. Greg Peters took Hastings’ place as co-CEO in 2023.
