Netflix co-founder Reed Hastings is stepping down as CEO as the company adds subscribers

Netflix Inc co-founder Reed Hastings said Thursday he will step down as CEO, handing the reins of the streaming service to longtime partner and co-CEO Ted Sarandos and the company’s chief operating officer, Greg Peters.

Shares of the company, which have fallen nearly 38% in the past year, rose 6.1% to $335.05 in after-hours trading, as the streaming video pioneer also said it drew more subscribers than expected at the end of last year.

Netflix has been under pressure after losing customers in the first half of 2022.

Sarandos and Peters will share the title of CEO, with Hastings serving as CEO. The change is effective immediately, and represents the culmination of a decade of succession planning by the Board of Directors. Peters and Sarandos were both promoted in July 2020 amid a difficult time for the company.

“It has been a baptism of fire, given Covid and the recent challenges in our business,” Hastings said in a statement. “But they’ve both managed incredibly well…so I and the board think it’s the right time to vie to succeed me.”

Hastings made an exit as Netflix said it added 7.66 million subscribers in the fourth quarter, beating Wall Street’s forecast of 4.57 million with help from “Harry and Meghan” and “Wednesday” in the battle for TV viewership.

Earnings per share, however, came in at 12 cents, less than the 45 cents forecast by analysts polled by Refinitiv.Netflix predicting “modest” gains in subscribers through March. And it expects revenue growth of 4% year-over-year over the period aided by new revenue streams.

The company faces constrained consumer spending and competition from The Walt Disney Company, Amazon.com and others that spend billions of dollars producing TV shows and movies for online audiences.

Netflix lost customers in the first half of 2022. It returned to growth in the second half, but new customer additions remained below the pace of recent years.

To kick off the growth, Netflix introduced a cheaper ad-supported option last November in 12 countries. It also announced plans to eliminate password sharing.

“2022 was a tough year, with a bumpy start but a brighter finish. We believe we have a clear path to accelerate our revenue growth,” Netflix said in its quarterly letter to shareholders.

The company’s global subscriber base reached 231 million by the end of December.

Audiences flocked to The Addams Family tale “Wednesday,” the company said, the third most-watched show in Netflix history. The documentary “Glass Onion” and “Harry & Meghan” murder mystery also made the quarter.

Net income fell to $55 million, or 12 cents per share, from $607 million, or $1.33 per share, a year earlier. Revenue rose 1.9% to $7.85 billion, in line with expectations.

Hastings, 62, co-founded Netflix as a DVD-by-mail company in 1997, saying the idea came from his frustration with returning rentals of “Apollo 13” to a local Blockbuster video store and getting a $40 late fee.

The business evolved in 2007 into the video streaming service that turned Hollywood upside down, prompting media rivals Netflix to invest billions in their own services.

Some of the challenges Hastings faced were subjective, such as his plan to spin off the company’s DVD business into a new company called Qwikster. The 2011 initiative cost the company 800,000 subscribers and sent shares plummeting.

The executive navigated another sharp stock drop in April 2022, when Netflix reported its first subscriber loss in over a decade. This forced Hastings to reconsider ideas it had previously brainstormed to spur growth, including an ad-supported version of the service.

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