Netflix topped Wall Street expectations for earnings and revenue in the first quarter, but the streaming giant’s shares still took a dive in after-hours trading Thursday.

Revenue rose 16% from the year-ago period to hit $12.25 billion, while diluted earnings per share came in at $1.23, nearly double a year ago.

Wall Street analysts’ consensus expectations were for earnings of 76 cents a share and total revenue of $12.18 billion.

Despite the beat, Netflix shares – which have risen 15% in 2026 to date – fell as much as 10% in after-hours trading. The cognitive dissonance between strong financials and an immediate drop in share price has occurred in many previous quarters. This time, one drag on shares may have been news about Reed Hastings that was relayed along with the earnings. The company co-founder and former longtime CEO is leaving the company’s board of directors later this year, the company said in its quarterly letter to shareholders.

The departure of Hastings, who has been pursuing philanthropy, a new real estate venture in ski country along with accepting a board appointment at leading AI firm Anthropic since exiting as CEO in 2023, represents a milestone. It will mark the end of a nearly three-decade journey for the executive at Netflix, from its scrappy origins mailing DVDs from a run-down former bank branch into a disruptive global entertainment powerhouse.

Watch on Deadline

Another source of concern for shareholders is a projected 1.5% decline in operating margins during the April-to-June quarter. Even though the company has signaled the dip, seeing it in the letter may have caused some shareholders to take profits. Operating margin came in at a bit more than 32% in the quarter and is expected to stay at that level for the full year.

The company said in the letter that its full-year guidance remains unchanged, but its second-quarter projections were a bit below that of the Street, which increased selling pressure on shares.

In the letter, the company said “slightly higher-than-planned subscription revenue” keyed the revenue gains. Subscription numbers, which used to send shares roaring higher each quarter (except during an infamous slump in 2022), are no longer regularly disclosed by Netflix. The company did say when reporting fourth quarter earnings in January that it ended 2025 with more than 325 million global subscribers.

The company called out the World Baseball Classic in the letter. The tournament drew 31.4 million viewers in Japan, ranking as the company’s top all-time title in the territory. It also spurred the biggest single day of subscription signups in the country and Japan topped all of the 190-plus countries on Netflix’s operational map in terms of its contribution to subscriber growth in the quarter.

The company recently phased in another round of price increases, though the move took place at the end of March, so it had little impact on the quarterly results. Typically, price increases prompt some cancellations, but the longer-term financial benefits are worth it, especially if some of those who canceled can be wooed back with compelling programming.

The quarterly filing was Netflix’s first since it bowed out of a deal to acquire Warner Bros. Discovery’s studios-and-streaming unit. Paramount now has a pending deal to buy all of WBD for a staggering $111 billion, including debt.

Netflix’s report kicked off the latest round of corporate earnings in the media and tech sector. Comcast is due to report its first-quarter results on April 24, with Disney and Paramount following in early May.