Netflix shares dropped more than 10% in early trading on Friday as investors reacted to the surprise departure of co-founder and Chairman Reed Hastings, alongside a cautious earnings outlook.
The stock has fallen over 18% since early December, when Netflix first made a high-profile bid to acquire Warner Bros Discovery. It recovered about 21% through Thursday’s close after the company abandoned the deal in late February, securing a $2.8 billion termination fee instead.
Hastings’ exit had been broadly expected after he stepped down as co-CEO in 2013, passing day-to-day leadership to Ted Sarandos and Greg Peters. However, the timing caught analysts off guard, coming at a sensitive point for the streaming giant.
With subscriber growth plateauing in mature markets and competition intensifying, Netflix has been shifting strategy beyond its core subscription model. The company is placing greater emphasis on advertising, live programming, and selective price increases to boost revenue per user.
On Thursday, Netflix reported first-quarter revenue and profit that beat expectations, but warned that earnings per share for the current quarter would fall short of analysts’ estimates. The company also forecast its slowest revenue growth in a year, according to LSEG data.
As growth moderates, price hikes may offer temporary relief but are unlikely to fully offset the slowdown. The company’s pivot to diversified revenue streams reflects broader industry pressures and the need to sustain profitability in a maturing streaming market.
