Netflix Launches a $37 Trillion Won-Scale Share Buyback… Intensifies Efforts to Defend the Stock Price and Enhance Shareholder Value

Global OTT leader Netflix has made the bold move of a $25 billion (about 37.1 trillion won) share buyback to relieve the intensified stock-price drop pressure following its recent earnings release and restore shareholder confidence.

■ A special measure on the scale of “37 trillion won” to offset market disappointment

On the 23rd (local time), according to the Wall Street Journal (WSJ) and major financial outlets, Netflix’s board of directors finalized approval for a common stock purchase plan totaling $25 billion. The move is interpreted as a “stock-price support measure” aimed at blocking the anxiety that spread after the stock fell by more than 10% following the first-quarter earnings report released on the 16th.

Netflix posted solid results that beat market expectations in the first quarter of this year, recording revenue of $12.25 billion and operating income of $3.96 billion. However, concerns about slowing growth were raised after it issued second-quarter guidance (outlook) of $12.57 billion, below the Wall Street consensus of $12.64 billion, and this immediately triggered a drop in the stock price.

■ Pivot to “shareholder returns” after the acquisition falls apart… Proving its ability to mobilize funds

The decision to buy back shares draws attention because it came right after withdrawing the recently pursued Warner Bros. Discovery (WBD) acquisition plan. Instead of a large-scale M&A it had been considering, Netflix chose to directly return the acquired excess cash to shareholders, signaling its focus on strengthening fundamentals within the company.

In particular, Netflix has further strengthened its cash liquidity by securing the contract termination fee (penalty) of $2.8 billion (about 4.1 trillion won) that arose during the WBD acquisition process involving the Paramount–Skydance partnership. Experts analyze that Netflix, backed by robust cash flow, is pursuing a strategy of enhancing enterprise value by raising earnings per share (EPS)—solidifying value through share buybacks of a large scale—rather than expanding its footprint.

■ Head off concerns about a leadership vacuum ahead of Reed Hastings’ exit

Another factor that hit the stock price negatively—news that founder Reed Hastings, the chairman—will step down, is also cited as a background to this decision. Having founded Netflix 29 years ago, Hastings is expected to step down from his role as chair starting with the upcoming June shareholders’ meeting.

With uncertainty in the market growing as leadership succession and weak earnings outlook coincide, Netflix is interpreted as sending a message to the market that “despite changes in leadership, the core operating strength of management remains solid,” through its large-scale share buyback.

■ Securing mid- to long-term growth potential by accelerating advertising and gaming

Along with the share buyback, Netflix is also pushing to secure new growth drivers. It plans to invest about $20 billion in content production this year alone and is maintaining its goal of more than doubling the size of advertising-tier revenue to $3 billion by 2026. Business diversification is also progressing smoothly, including newly launched children’s game apps.

Right after news of share buyback approval was reported, Netflix’s stock rebounded by about 1.5% in after-hours trading, sending a positive signal. Attention is focused on whether this measure can lead to the recovery of long-term investment sentiment, beyond short-term stock-price defense.