LOS ANGELES, California: Netflix shares fell sharply in premarket trading after co-founder and chairman Reed Hastings announced he would step down, unsettling investors at a time when the streaming giant is grappling with slowing growth and strategic uncertainty.

The stock dropped nearly 10 percent following the surprise announcement, which comes as Netflix searches for new revenue drivers after walking away from a high-profile deal with Warner Bros Discovery earlier this year.

In a letter to investors on April 16, Netflix said Hastings will not stand for re-election at its annual meeting in June and plans to focus on philanthropy and other pursuits.

"This was unexpected news, and Hastings is seen as the DNA of the company," said Kathleen Brooks, research director at XTB.

Hastings, who co-founded Netflix 29 years ago, has played a central role in transforming the company from a DVDs-by-mail service into a global streaming leader. He has steered the company through multiple transitions and challenges, including the pandemic and shifts in consumer viewing habits.

He also led the unsuccessful bid to acquire Warner Bros Discovery, which would have given Netflix access to major franchises such as "Game of Thrones" and "Friends". The company abandoned the deal in February.

"Hastings' departure from Netflix has jolted investors at an interesting time for the company," Brooks said.

The leadership change comes as Netflix faces mounting pressure from intensifying competition in the streaming market. Rivals have continued to invest heavily in content and pricing strategies, squeezing growth across the sector.

In response, Netflix has been expanding into new areas, including ad-supported streaming, live sports, and gaming, to diversify its revenue and sustain subscriber growth.

"While some of that valuation decline will also be investor disappointment at Hastings leaving the business, it's fair to say that Netflix is not usually in the habit of coming up short with earnings strength," said Dan Coatsworth, head of markets at AJ Bell.

The company's stock performance has been volatile in recent months. Shares have fallen more than 18 percent since early December, when Netflix first submitted its bid for Warner Bros Discovery. After the deal was pulled on February 26, the stock recovered about 21 percent.

On April 16, Netflix reported first-quarter revenue and profit that beat analyst estimates. However, it forecast current-quarter earnings per share below expectations and indicated that quarterly revenue growth would be the slowest in a year, according to LSEG data.

The mixed outlook has added to investor concerns about the company's ability to sustain momentum in a crowded streaming landscape.