Investing.com -- Needham analyst Laura Martin is encouraging investors to buy Netflix shares following the fresh sell-off triggered by the streaming giant’s latest earnings report.

Netflix plunged close to 10% in premarket trading on Friday, a day after the company issued second-quarter guidance that missed analyst expectations and announced that chairman and co-founder Reed Hastings would be stepping down.

The company said Hastings will not seek re-election at the company’s annual meeting in June, with plans to shift his focus toward philanthropy.

Netflix topped first-quarter revenue and profit estimates, but its outlook for the current quarter disappointed, with projected earnings per share (EPS) coming in below analyst expectations and revenue growth forecast at its slowest pace in a year.

However, Martin flagged several reasons for optimism from the report. She pointed to Netflix’s push into new mobile engagement products — including vertical video, video podcasts, and kids games — as features she believes “will lower churn, add pricing power, and improve LTVs.”

The analyst also highlighted Netflix’s approach to managing fan communities around its content, arguing that building and sustaining fandoms is "every media company’s job to be done."

“In old media, NFLX does this best, alongside DIS, we believe,” Martin added.

Further, she noted that Netflix’s Silicon Valley roots position it as an early adopter, citing its moves into generative AI capabilities, programmatic advertising, and improved content recommendations and personalization.

"Monetization follows time spent," Martin wrote.

Netflix projected second-quarter EPS of $0.78, short of the Wall Street consensus of $0.84, and revenue of $12.57 billion, also below analyst expectations of $12.64 billion.

For the first quarter, the company delivered EPS of $1.23, handily beating the $0.79 analyst estimate, on revenue of $12.25 billion — up 16.2% year-over-year and ahead of the $12.18 billion consensus.