Billionaire Netflix co-founder Reed Hastings quits after earnings miss
The billionaire co-founder and chair of Netflix has quit after the streaming giant’s weak financial outlook spooked the market.
Reed Hastings, who co-founded Netflix 29 years ago, told investors he will not stand for re-election in June and will focus on philanthropy once he leaves the firm.
The shock departure comes after the streaming giant reported strong earnings, with its $1.23 per share well above the expected $0.76.
The firm’s net income rose 82 per cent to $5.3bn, beating market forecasts of $3.3bn.
The company’s revenue grew 16 per cent year on year to $12.3bn but reported soft revenue expectations and margin guidance for the next year.
Netflix stock slumps
The New York-listed stock fell about more than nine per cent to $98.20 as Wall Street digested Hastings’ departure and the cautious outlook.
Hastings is worth about $6.6bn, according to Forbes, and holds more than 4.2m shares in Netflix.
The streaming tycoon said in a statement: “Netflix changed my life in so many ways and my all-time favourite memory was January 2016, when we enabled nearly the entire planet to enjoy our service.
“My real contribution at Netflix wasn’t a single decision; it was a focus on member joy, building a culture that others could inherit and improve, and building a company that could be both beloved by members and wildly successful for generations to come.”
Netflix said: “Mr Hastings’ decision to not stand for re-election is not as a result of any disagreement with the company.”
In February, Netflix lost out in a tightly-fought battle to takeover Warner Bros Discovery.
Netflix had been close to a deal for Warner’s streaming and audio assets, before Paramount crashed into proceedings with a hostile counter-bid.
Paramount emerged victorious after Netflix refused to raise its offer.
The streaming group confirmed it would not match Paramount’s latest $31 (£23)-per-share bid, ending an $83bn pursuit that had threatened to reshape the entertainment sector.
Paramount is owned by David Ellison, the son of Trump backer and Oracle chief Larry Ellison.
Warner ‘not a need’
A Netflix adviser said the company had been bidding against a buyer willing to pay a price it viewed as irrational.
“There’s no point in playing chicken with someone who won’t turn the wheel”, they said.
Netflix told investors Warner Bros would have been a “nice to have, not need to have” proposition.
Hastings and Marc Randolph founded Netflix as a DVD mail-order company in northern California in 1997.
Netflix now counts around 325m subscribers and has produced award-winning films and television shows including House of Cards, The Crown and Roma.
The streaming giant has upped its subscription fees in recent years and is eyeing new revenue streams including live sport and podcasting.