Netflix’s Hollywood Land Grab and a $25 Billion Bet on Itself

Netflix acquires Radford Studio for $330M, a steep discount from 2021 peak, while Q1 revenue beats but weak guidance and rising costs pressure stock.

The streaming giant is playing two very different games at once. On one hand, Netflix is scooping up a historic Hollywood studio lot at a fraction of its peak value. On the other, it is trying to reassure investors that a soggy near-term outlook is just a speed bump, not a structural problem.

A Studio at 82% Off

Netflix is in advanced talks to buy the Radford Studio Center in Los Angeles from Goldman Sachs for roughly $330 million. That represents a staggering discount. Hackman Capital Partners paid $1.85 billion for the property in 2021 before rising interest rates and vacancy rates forced a default. Goldman, as the lead lender, took control of the asset.

The timing is no accident. Netflix’s lease at its current Sunset Bronson Studios expires this year, and the company has been aggressively building its own production infrastructure. A $1 billion studio is rising on a former military base in New Jersey, lured by generous state tax incentives. In New Mexico, Netflix bought the ABQ Studios in 2018, again with subsidies sweetening the deal.

The Radford acquisition fits a pattern: buy distressed real estate at a deep discount, lock in long-term production capacity, and reduce reliance on rented space.

The Numbers Were Good. The Guidance Was Not.

Netflix’s first-quarter 2026 results were solid by any objective measure. Revenue hit $12.25 billion, up 16% year over year and ahead of the Wall Street consensus of $12.18 billion. Earnings per share also beat expectations.

The market’s reaction was brutal. The stock has fallen more than 10% since mid-April, and as of the latest trade sits at $92.44—well below the all-time high of $133.91 set on June 30, 2025. The culprit: second-quarter guidance. Netflix forecast revenue of $12.57 billion, just shy of analyst estimates, and earnings per share of $0.78, also below consensus. The full-year operating margin target of 31.5% missed the 32% the market had baked in.

A $25 billion share buyback authorization did nothing to stem the selling.

Costs Are Rising, Especially in the Back Office

The margin pressure has a clear source. Content amortization is spiking in the first half of 2026, and the company expects that growth rate to moderate to mid-to-high single digits in the second half. But the administrative line is a bigger surprise. General and administrative expenses surged 43% in the first quarter—nearly three times the pace of revenue growth.

For the second quarter, Netflix projects an operating margin of 32.6%, down from 34.1% a year earlier. Management insists this is a front-loaded cost pattern: margins will improve in the third and fourth quarters. Investors will get their first check on that promise when Netflix reports July 2026 results.

Advertising Is the Bright Spot

The ad-supported tier, priced at $8.99 a month, now accounts for more than 60% of new sign-ups in markets where it is available. The advertiser base has swelled to over 4,000 clients, a 70% increase from a year ago. Netflix expects ad revenue to roughly double this year to around $3 billion.

Free cash flow hit $5.1 billion in the first quarter, and the company raised its full-year forecast to roughly $12.5 billion, up from an earlier estimate of $11 billion.

Wall Street Is Split

Analyst targets range from $96 to $135. TD Cowen holds at $112, betting that U.S. price increases will fully kick in by the third quarter. BMO Capital Markets is the most bullish at $135. Pivotal Research’s Jeffrey Wlodarczak is more cautious, rating the stock a “Hold” with a $96 target. He warns that short-form video from TikTok, Instagram Reels, and YouTube Shorts could do to streaming what streaming did to linear TV—especially among Gen Z viewers.

A Shareholder Meeting With Political Overtones

Netflix’s virtual annual meeting on June 4 will feature two unusual shareholder proposals. The first demands a report on the return on ESG investments. The second calls for an analysis of “politicized brand deviation”—essentially arguing that Netflix’s “woke” content is hurting financial performance. Both proposals come from conservative activist groups and are unlikely to pass.

Co-founder Reed Hastings will not stand for re-election to the board, marking the end of an era for a company he helped build from a DVD-by-mail startup into a global streaming powerhouse.