NFLX shares fall despite strong fundamentals as Q1 EPS misses estimates and advertising growth targets double to $3 billion.
Netflix raised its free cash flow guidance to $12.5 billion for 2026 and doubled its advertising business target to $3 billion, following a $2.80 billion termination fee from a scrapped Warner Bros. deal. The company reported Q1 revenue of $12.25 billion, up 16.2% year-over-year, with free cash flow surging 91.44%.
Despite these gains, NFLX shares trade at $89.65, down 24.76% over the past year, after Q1 EPS of $1.23 missed estimates by 8.55%. Analysts focus on trailing earnings rather than forward EPS of $18.03, which reflects planned operating margin expansion of 31.5%.
Shares remain under pressure, declining 7.87% over the past month, as broader mega-cap tech weakness and a beta of 1.548 amplify volatility.