CEO Reed Hastings steps down, COO Greg Peters to take co-CEO role

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Netflix (NFLX) co-CEO and co-founder Reed Hastings announced Thursday he would step down from his role leading the company. COO Greg Peters will join current Netflix co-CEO Ted Sarandos in that role. Hastings will now serve as the company’s executive chairman.

Netflix also reported fourth quarter financial results that were mixed, with subscriber growth topping expectations, coming in at 7.66 million against forecasts for 4.5 million, with adjusted earnings missing expectations.

Shares of Netflix were up as much as 6% following this news.

Here are Netflix’s fourth quarter results compared to Wall Street’s consensus estimates, as compiled by Bloomberg:

  • Revenue: $7.85 billion versus $7.86 billion expected

  • Adj. earnings per share (EPS): $0.12 versus $0.58 expected

  • Subscribers: 7.66 million versus 4.5 million net additions expected

Quarterly net additions grew by 7.66 million, above company guidance of 4.5 million as the streaming giant rolled out new initiatives like a crackdown on password sharing and a recently launched ad-supported tier to help bolster growth.

A slew of high-profile and record-breaking content releases, including “Glass Onion,” “Troll,” “All Quiet on the Western Front,” “My Name is Vendetta,” and “Wednesday,” also aided subscriber momentum.

Guidance came in strong with revenue expectations for the first quarter of 2023 set at $8.17 billion as foreign exchange headwinds begin to ease amid a weakening U.S. dollar. As previously stated, the company did not provide subscriber growth guidance as “revenue is our primary top line metric.”

Netflix also said it expects earnings per share to come in at $2.82 with 2023 free cash flow expectations estimated to hit at least $3 billion.

Netflix stock have been on a tear in recent weeks, up roughly 60% over the past six months with about a 10% gain so far in January, outperforming the Nasdaq Composite’s 5% gain.

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“2022 was a tough year, with a bumpy start but a brighter finish. We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering,” the company wrote in a letter to shareholders. “As always, our north stars remain pleasing our members and building even greater profitability over time.”

Investors will be closely monitoring the company’s earnings call for further updates regarding its newly launched ad-supported tier, in addition to its crackdown on password sharing.

Analysts have cautioned investors that the impact of Netflix’s foray into advertising will take some time to kick in given the tier just launched in November.

The ad plan, dubbed “Basic with Ads,” comes at a cost of $6.99 a month in the U.S. and serves as a complement to Netflix’s existing ad-free tiers — the Standard plan ($15.49/month) and the Basic plan ($9.99.)

Other questions include whether or not Netflix will slow down its $17 billion content spend, in addition to the possibility of the company dabbling in more mergers and acquisitions with WWE up for sale.

Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]

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