BackNetflix boss steps down as board plans transition to add subscribers
Netflix co-founder Reed Hastings has stepped down as the CEO of the company.
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Reed Hastings, co-founder of Netflix, gave the company's leadership to co-CEO Ted Sarandos and COO Greg Peters as he stepped down as the co-CEO. He will now serve as an executive chairman. Meanwhile, in view of the company reporting that it had more subscribers than anticipated at the end of 2022, shares of Netflix increased 6.1% to $335.05 in after-hours trading.
Hastings’ resignation comes as Netflix announced 7.66 million new subscribers in the fourth quarter, above Wall Street expectations of 4.57 million, thanks to Harry & Meghan and Wednesday. Although experts surveyed by Refinitiv had predicted 45 cents for earnings per share, the actual figure turned out to be 12 cents. Netflix anticipates "modest" subscription growth through March.
The board has spent the last 10 years planning for a transition, and the change in leadership will be effective immediately. When the business was facing adversity in July 2020, both Peters and Sarandos got promoted. As a result of losing consumers in the first half of 2022, the company has been under pressure. Its stock, once a favourite on Wall Street, has decreased by about 38% in the last 12 months.
The first half of 2022 saw a decline in Netflix users. Although it resumed growing in the second half, the rate of new customer additions is still below that of recent years. In November, Netflix introduced a less expensive, ad-supported version in 12 countries to spur development. It has also taken measures to reduce password sharing.
Hastings called it “baptism by fire" as he singled out the COVID-19 pandemic among the recent challenges within the business while praising Peters and Sarandos. "They've both managed incredibly well. So, the board and I believe it's the right time to complete my succession," he said in a statement.
With the support of new revenue streams, Netflix predicted a 4% yearly increase in revenue during the term. Consumer spending is being constrained, and the company is up against Walt Disney, Amazon and other rivals that are investing billions of dollars to produce TV shows and movies for online audiences.
(With Reuters inputs)
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