Key Points
Netflix beat expectations in Q1 2026.
Its forecast for the second quarter wasn't as bright.
The stock price could continue to trade sideways this year.
After Netflix(NASDAQ: NFLX) walked away from a potential acquisition deal earlier in the year with Warner Bros Discovery, Q1 2026 was going to be a quarter where the focus could be squarely upon the streaming giant's performance.
Netflix did surpass expectations in its report, but it also offered several other updates that the investing world did not like hearing. Shares had been marching higher earlier in the month, trading above the $100 threshold, but the stock price closed below $100 the day after the report.
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Here's what investors heard in the recent earnings report that worried them and what to consider next.
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Missed expectations and a key departure
For the next quarter, Netflix provided forecasts for both sales and earnings that fell short of analysts' expectations. For Q2 2026, it projects revenue of $12.5 billion, while analysts were looking for $12.6 billion. The forecast for earnings per share of $0.78 was also below the $0.84 that was expected. Also notable was the announcement that Netflix Co-Founder Reed Hastings was stepping down from the board at the end of his term in June.
So there was a lot that weighed on the stock.
What's next for Netflix
For long-term investors, Netflix still has many bright spots, including its growing advertising revenue, budding gaming division, video podcasts, and Netflix House attractions in Dallas and Philadelphia.
Over the next year, it's a different story. The main revenue growth catalyst may just be recent price increases and ad revenue, which is not as exciting as when Netflix was adding 41 million new members a year, like in 2024.
It's a company that can still make shareholders money in the years and decades ahead, but 2026 looks like it will be choppy.
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Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
