Netflix beats on Q1 revenue, gives downbeat Q2 forecast, and says Hastings will leave in JuneNetflix beats on Q1 revenue, gives downbeat Q2 forecast, and says Hastings will leave in June

Streaming giant Netflix reported results for its first quarter after markets closed on Thursday and said its cofounder and chairman, Reed Hastings, would leave the company’s board in June after his term expires. 

• The company posted revenue of $12.25 billion, above Wall Street’s consensus of $12.18 billion. Its per-share profit of $1.23 was above estimates of $0.76, but that’s likely because it was boosted by the $2.8 billion breakup fee from walking away from its merger deal with Warner Bros. Discovery.
• Shares fell sharply after-hours following the earnings report.
• Hastings is leaving in order to “focus on his philanthropy and other pursuits,” the company said. He has been with Netflix since 1997 and stepped back from CEO duties in 2023. 

The Takeaway

Investors seemed to love Netflix walking away from the Warner Bros. deal, bidding the stock up more than 25% since late February, when it decided to bail. A decent chunk of those gains were seemingly taken away in the immediate aftermath of this earnings report. Going forward, Netflix will have to stay in investors’ good graces without Hastings, the man who transformed the company from a DVD-by-mail business to one of the earliest streaming success stories

Elon Musk wants to go “light speed” on Terafab. The biggest chipmaker in the world says “there are no shortcuts.”Elon Musk wants to go “light speed” on Terafab. The biggest chipmaker in the world says “there are no shortcuts.”

Tesla CEO Elon Musk has reportedly asked the chip industry suppliers for his Terafab chipmaking project to move at “light speed” in an effort to help Tesla and SpaceXmanufacture the AI chips they need. But on an earnings call this morning, TSMC, the world’s biggest chipmaker and a Tesla supplier, said it isn’t convinced that’s physically possible.

• TSMC Chairman and CEO CC Wei offered a blunt assessment of Musk’s ambitious Terafab timeline: “There are no shortcuts.” According to Wei, the physics of a modern foundry, which he says takes roughly five years to build and ramp, remains the ultimate speed limit, regardless of the customer’s urgency. “That’s a fundamental of the foundry industry,” he said.
• Remember, Musk has enlisted Intel to join in the Terafab effort.
• Meanwhile, TSMC crushed Q1 expectations and gave upbeat guidance, but investors were unimpressed.

The Takeaway

It’s hard to overstate how important the Terafab project will be, if you believe what Musk says about chip supply being the “limiting factor” for Tesla’s growth in three to four years. During a presentation for Terafab last month, Musk said, “We either build the Terafab or we don’t have the chips.” Growth is already slowing at Tesla, where revenue declined for the first time ever last year, so not having the chips the business requires isn’t really a palatable option. A better alternative to keep that growth up: maybe Musk should just take our advice and merge Tesla with SpaceX.