Canada’s Streaming Policy Shift and Ad Revenue Momentum Give Netflix a Respite as Hastings Exits Board

Netflix shares snap eight-session losing streak after Canada scraps controversial streaming content fee, easing margin pressure. Strong Q1 earnings and ad-tier growth offset governance uncertainty as Reed Hastings exits.

As Netflix shareholders convened virtually for the company’s annual meeting, founder Reed Hastings formally stepped down from the board, capping a period of governance upheaval that has included a failed acquisition attempt and activist demands for greater influence. Yet even as tensions simmered, the stock found a footing, snapping an eight-session losing streak that had erased roughly a quarter of its value since mid-April.

The catalyst for Thursday’s relief rally came from an unexpected quarter: Ottawa. The Canadian government ordered its media regulator to scrap a rule that would have forced streaming services to funnel a portion of their revenue into domestic content production, a move analysts say eases margin pressure in the key North American market. That regulatory win coincided with strong institutional buying — firms including WCG Wealth Advisors, Nvest Financial, and Norges Bank have recently added to their Netflix positions.

Operationally, the picture remains robust. Netflix beat first-quarter earnings estimates by a wide margin, reporting profit of $1.23 a share against a consensus of $0.76, while revenue climbed 16.2% to $12.25 billion. The company raised its free-cash-flow forecast for the current year to $12.5 billion and continues to repurchase shares at a billion-dollar clip.

Advertising is emerging as a powerful amplifier. Bank of America projects the ad-supported tier will generate roughly $3 billion in annual revenue by 2026 — roughly double current levels — supported by 250 million monthly active users in that tier. Bernstein SocGen reiterated its outperform rating with a $110 price target, citing operating leverage and growth potential in non-English-speaking markets.

On the technology front, chief technology officer Elizabeth Stone told the Bloomberg Tech Conference that Netflix is testing a natural-language interface using artificial intelligence, allowing subscribers to describe moods or themes to get more personalized recommendations — a bid to tackle content overload.

The shares, which closed at €70.30, have been trading in oversold territory. The relative strength index, which had dipped to 29, has since recovered to 31, a reading some traders interpret as a potential stabilisation signal ahead of the next quarterly report due July 17.

Despite the upbeat operational narrative, governance remains a flashpoint. The National Legal and Policy Center has urged shareholders to vote for cumulative voting rights, arguing that the failed pursuit of Warner Bros. Discovery represents a strategic misstep. With Hastings now gone, co-CEOs Greg Peters and Ted Sarandos face the dual challenge of delivering on the elevated cash-flow guidance for 2026 while pacifying restive institutional investors. Of the 52 analysts covering the stock, 36 recommend buying, with a median price target near $120.