Forget about chilling, it’s all about expectations! That is one of the key takeaways from Netflix’s first-quarter earnings update and outlook late Thursday. The latest figures exceeded most expectations, and the global streaming giant stuck to its 2026 guidance — but many investors had hoped for more.
Blame the recent U.S. price hikes and the recently returned stock swagger after the streamer dropped out of the bidding war for Warner Bros. Discovery and received that $2.8 billion break-up fee.
Netflix shares dropped 9 percent in Thursday after-market trading and as of 7:15 a.m. ET on Friday were down 10.8 percent at $96.20.
Wall Street analysts have started sharing their takes on the results, the outlook and the stock – and on that upcoming exit of Netflix founder and chair Reed Hastings, along with latest commentary by co-CEOs Ted Sarandos and Greg Peters.
Among the issues dissected are the price hikes, advertising momentum, the ongoing debate about Netflix’s engagement trends, and, yes, the World Baseball Classic. Read their commentary and insights below.
Analyst: Michael Morris, Guggenheim Securities
Stock rating and price target: buy, $120, down $10 from $130 previously
Takeaways: The title of Morris’ report put the spotlight on why Netflix’s stock took a hit following its latest financial and operating update. “Investors Retrench as ‘Beat and Maintain’ Comes up Short of Expectations.” He explained: “Netflix’s first-quarter results exceeded expectations across key metrics, yet the stock faced pressure as investors had anticipated more than a simple guidance reiteration given the strong quarter and the $2.8 billion WBD termination fee windfall.”
In addition, the streamer’s second-quarter revenue guidance “implies a deceleration to 12 percent foreign exchange-neutral year-over-year growth from the first-quarter’s 14 percent, further tempering near-term enthusiasm.” Morris’ take: “Management’s decision to maintain rather than raise guidance reflects a measured approach given it remains early in the year with ‘plenty of time to go, plenty of work left to do’.”
The departure of Netflix’s founder and chair Hastings also didn’t rattle the analyst, who described the move as “the completion of a long-planned succession process that began over a decade ago.” Still, all in, Morris cut his stock price target on Netflix, explaining: “We modestly temper our near-term outlook in line with management guidance and lower our price target to $120 on a more tempered target multiple.”
Analyst: Jeffrey Wlodarczak, Pivotal Research Group
Stock rating and price target: hold, $96, up $1 from $95
Takeaways: Given a mixed bag-type of quarter, this analyst updated his model for Netflix. “We lowered our subscriber estimates and increased our ARPU (average revenue per user) forecast, which led to a modest $1 increase in our YE’26 target price to $96,” he explained.
So far, so good. But he remains worried about competition for people’s attention and time. “While engagement held around +2 percent, we remain concerned that short-form entertainment (such as TikTok, Instagram, X, YouTube shorts and Snap) is doing to streaming what streaming has done to traditional TV as, especially younger, consumers spend an ever- increasing time on these social media platforms amidst plummeting attention spans, which is fundamentally negative for long-form content,” Wlodarczak offered. “This is exacerbated by free ad-supported (FAST) TV channels that appear particularly attractive to increasingly challenged lower per-capita income households.”
The Pivotal analyst also touched on the abandoned bid for WBD, but not in the way you may expect. “This backdrop is exacerbated by what we view as a much more powerful global competitor in the combined Paramount Skydance/WBD, although admittedly they will in the medium term be very focused on debt reduction, hampering their ability to be super aggressive,” he argued, sharing a less than bullish conclusion: “Our overall view is that Netflix is properly valued at current levels and we believe increasingly growth is likely to be driven by price increases, and advertising gains off a relatively low base, rather than subscriber growth. We view the story as lacking excitement relative to a rich valuation.”
Analyst: Alicia Reese, Wedbush Securities
Stock rating and price target: outperform, $118
Takeaways: Reese saw no need to reshuffle her longer-term expectations. “While Netflix continues to expand its content offerings, which drive ever-increasing engagement, we expect substantial growth in global advertising, and the latest price increases could provide a meaningful boost to profitability this year,” she concluded. “That said, European resistance to price increases could be an overhang this year as Netflix works through legal challenges.”
Second-quarter guidance was indeed “softer,” she acknowledged. “Still, maintained full-year guidance suggests strong second-half runway with upside potential.”
Reece remains bullish, sharing these takeaways: “We remain positive on Netflix’s overall opportunity to expand revenue in 2026, driven by both domestic subscription pricing and advertising revenue, while continuing to expand its global footprint with incremental subscriber and advertising opportunities, such as in Japan. … Should Netflix overcome European challenges to its subscription price increases, we could see further upside in its share price this year.”
Analyst: Ralph Schackart, William Blair
Stock rating and price target: outperform, no price target
Takeaways: On Wall Street, earnings are often evaluated compared with expectations, and not only about the latest quarter. The streamer became a victim of that this week. “Netflix investors had a high bar for the company heading into its first-quarter earnings report that the company did not meet,” Schackart explained. “Shares were down about 9 percent in the after-market, due to the second quarter being slightly below the Street and the company only maintaining its 2026 outlook when some investors were expecting a raised outlook following the increase in price.”
But the William Blair analyst sees potential upside once the Street gets over its first disappointment. “We believe that after investors digest the positive growth in the quarter, expanding margins, and the company’s ability to continue to post manageable growth in low- to midteens, the share price will rebound,” he suggested. “There was nothing thesis-changing in this quarter to warrant a sell-off, in our view, besides expectations being high going into the quarter.”
Concluded Schackart: “Netflix remains well positioned to remain a secular streaming winner, … and we believe it will retain pricing power over the long term and will continue to grow its members.” He predicted stock price upside in the mid-20 percent range over the next year.
Analyst: Robert Fishman, MoffettNathanson
Stock rating and price target: buy, $120
Takeaways: Fishman didn’t express so much surprise about Netflix’s unchanged full-year revenue guidance, but highlighted its unchanged 2026 margin forecast despite walking away from the Warner Bros. deal. Last quarter’s 2026 guidance included $275 million in deal-related expenses, which could have been expected to warrant an update now. “However, after incorporating the acquisition of InterPositive, an AI filmmaking technology company, plus the pull forward of Warner Bros. deal costs, the total M&A costs remained largely unchanged, leaving a similar drag on … margins this year,” the analyst explained.
Overall, though, he remains bullish on Netflix and stuck to his stock rating and price target. Pointing out the health of the core subscription business and the growth trajectory of the streamer’s advertising revenue, he highlighted upside ahead.
Fishman encouraged investors to focus on the long-term, pointing out that Netflix’s financial and operating update didn’t really change the longer-term outlook and story. Concluded the analyst: “We think once short-term expectations recalibrate, investors should return to value the company based on the longer-term earnings power.”
Analyst: John Blackledge, TD Cowen
Stock rating and price target: buy, $112
Takeaways: The analyst highlighted that Netflix’s first-quarter results beat Wall Street expectations, but its second-quarter outlook came in “below consensus estimates, … largely on content timing.” All in all, he maintained his stock rating and price target.
Addressing the ongoing debate about Netflix’s engagement trends, Blackledge noted: “Management cited first-quarter engagement up 2 percent year-over-year, similar to the second half of 2025 growth, with their internal quality metric hitting an all-time high, as the company broadens its catalog and expands into new categories, such as podcasts.” And he gave a shout-out to “strong viewership” for the likes of season 4 of Bridgerton, season 2 of One Piece and “the live broadcast of the World Baseball Classic in Japan, which drove the largest single country contribution to member growth in the quarter.“
While second-quarter guidance came in below the analyst’s and Street consensus estimates, the TD Cowen expert assessed the impact of recent U.S. price hikes. “We expect second-quarter revenue to begin to reflect the benefit from the late March U.S. price increase, which management noted has gone well,” he wrote. “The third quarter should reflect the full impact of the pricing change. Netflix also announced Spain price adjustments. … Second-quarter engagement should benefit from a solid content slate, including returning hits Beef (season 2) and Temptation Island (season 2).”
Analyst: Mark Mahaney, Evercore ISI
Stock rating and price target: outperform, $115
Takeaways: “Lights, Camera, Quality Compounder.” How’s that for the headline of an analyst report?! Mahaney stuck to his rating and stock price target “in the wake of mixed first-quarter earnings results.”
While the streamer’s shares traded off 8-9 percent in after-market activity “on a lack of a 2026 [outlook] raise and the light second-quarter operating income guide,” Mahaney highlighted: “We don’t view the Netflix long thesis as changed, however. We continue to view Netflix as a high-quality asset and a global leader in video streaming, supported by unmatched scale, a proven and increasingly localized content production engine and a differentiated product strategy spanning premium paid subscription, ad-supported subscription, live events, and gaming.”
Among qualitative takeaways, he highlighted that management reported “seeing no material impact from macro trends in its ads or its subscription segments, Netflix said the reaction to its recent price increases has been normal and in line with its expectations” and the company’s ad revenue “remains on track to double to $3 billion in ’26.” Plus, “key quality engagement metrics, though not specifically disclosed, hit an all-time high in the first quarter, and Netflix is rolling out a series of features/offerings like vertical video, podcasts, and more regional live sports (e.g. World Basic Classic in Japan) that should help drive further engagement.”
Analyst: Brian Pitz, BMO Equity Research
Stock rating and price target: outperform, $135
Takeaways: Pitz came away from Netflix’s latest earnings update with largely unchanged financial estimates and confidence that the business remains on target. In fact, he entitled his report “2026 on track as Reed Hastings signs out.” His take on the chairman’s upcoming exit: “While Reed’s decision to leave the board in June may rattle investors, we believe he has transitioned effectively to the next generation of leadership.”
The analyst underlined that “engagement growth remains a key debate,” offering this take: “We see gaming and podcasting as emerging media formats on Netflix that can support long-term engagement growth. Importantly, podcasts over-index in daytime viewing and on mobile, suggesting that podcasts should be additive to broader engagement rather than cannibalistic of core TV/film engagement.”
Pitz also likes what he is seeing in terms of Netflix’s ad momentum. Emphasized the BMO expert: “Advertising continues to scale as fill rates improve, and 60 percent of all new subs in ad-tier regions sign up for the ad-supported tier.”
