Netflix’s High-Stakes Acquisition Drama Weighs on Share Price

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Despite surpassing profit forecasts and achieving a fresh milestone in subscriber growth, Netflix shares are hovering near a 52-week low. The source of investor anxiety lies not in the company's core operations but in a high-risk strategic gamble: its planned acquisition of Warner Bros. and an intensifying bidding war that is sowing significant uncertainty in the market.

The center of investor concern is Netflix's offer for Warner Bros. Discovery (WBD). The streaming giant intends to acquire WBD's studio and streaming assets in a deal valuing the company at $82.7 billion. A pivotal change to the terms on January 20th amplified fears: Netflix converted its offer into an all-cash bid of $27.75 per WBD share.

While this move removes uncertainty for WBD shareholders, it substantially increases the financial burden on Netflix. To fund the purchase, the company has arranged bridge loans totaling $42.2 billion. In a clear signal to the market, management also suspended its share buyback program—a stark shift after the company repurchased nearly $9.2 billion worth of its own stock in 2025.

Complicating matters, Paramount Skydance has submitted a competing hostile takeover bid, reportedly valued at a higher $30 per share. This development fuels worries that Netflix could be drawn into a costly bidding contest and ultimately overpay.

Strong Fundamentals Overshadowed by Strategy

From an operational standpoint, the streaming leader delivered solid fourth-quarter 2025 results. Revenue climbed 18% to $12.05 billion, slightly ahead of analyst expectations. The company also impressed with its earnings per share of $0.56 and its subscriber base reaching 325 million.

Key financial metrics for the quarter included:

• Revenue: $12.05 billion (an 18% year-over-year increase)
• Net Income: $2.4 billion (up 29% from the prior year)
• Operating Margin: 31%
• Annual Advertising Revenue (2025): Doubled to $1.5 billion

Nevertheless, the market reaction was negative. The stock declined to approximately $83.40, representing a loss of about 37% from its all-time high in June 2025. Currently, robust fundamental performance is insufficient to alleviate skepticism surrounding the company's aggressive expansion strategy.

Tempered Growth Outlook Adds Pressure

Beyond the acquisition battle, the company's guidance for the current year is applying additional pressure. The forecast for 2026 anticipates revenue growth of 12% to 14%, marking a noticeable deceleration from the 16% growth achieved in 2025. First-quarter profit expectations and the operating margin forecast also fell short of Wall Street estimates. Analysts responded with a series of price target reductions, with the consensus target now standing near $121.

Regulatory hurdles present another challenge alongside the financial strain. Antitrust authorities in the United States and Europe are scrutinizing the proposed takeover. The next critical milestone is the vote by WBD shareholders, expected in April 2026, which will determine the fate of the strategy and, by extension, the medium-term trajectory for Netflix's stock.