A $25 Billion Buyback, Even Bigger Expectations: Netflix Faces Investor Doubts
Key Points
Netflix plans to purchase $25 billion worth of stock.
The buyback wasn't enough to move the stock price.
The streaming giant has some revenue opportunities ahead, as well as challenges.
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When Netflix (NASDAQ: NFLX) decided not to pursue a deal to acquire assets from Warner Bros. Discovery, many shareholders wondered about updates on the company's stock buyback plans.
It was only fair to wonder, given that the streaming giant said it would continue its buyback program in February after it was no longer pursuing a deal with Warner Bros.
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The Netflix board recently authorized $25 billion in stock buybacks, in addition to the $6.8 billion remaining under a plan from December 2024. That offered clarity, but it wasn't enough to move the stock price.
Image source: Getty Images.
The earnings report overshadows the buyback announcement
Netflix recently reported its earnings results for the first quarter of 2026 earnings, which ranged from underwhelming to concerning for some investors. Its guidance didn't quite meet analysts' expectations for Q2 2026, and it was revealed that Netflix co-founder Reed Hastings will step down from the board in June.
The $25 billion buyback may have seemed like welcome news, but with everything else going on, in terms of the stock price's response, the update was largely shrugged off.
What to consider before making an investment decision
Netflix is in the midst of a shift from a young disruptor with explosive revenue growth potential to a veteran operator. Sales growth opportunities still exist, but it becomes increasingly harder to move the needle when you're a $390 billion company.
It may take time for investors to reset some of their expectations. For the rest of 2026, the streaming giant may rely more on ad revenue and subscription growth for sales than the market may want to see. Without any significant earnings beats or forecast boosts, the stock price will likely be stuck in a choppy trading pattern.
For the long-term investor, Netflix's pursuit of everything from video podcasting to live events offers potential revenue growth opportunities. It'll just require conviction, patience, and time to see if the management team executes on turning opportunities into meaningful revenue that eventually turns into profit.
Should you buy stock in Netflix right now?
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Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
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