Netflix’s Hollywood Real-Estate Coup and a $25 Billion Bet on Its Own Future

Netflix acquires Radford Studio at a bargain price, launches $25B buyback, and sees ad revenue surge—while Wall Street debates if the Q2 dip is a buying opportunity.

The streaming giant is juggling a historic studio acquisition at a bargain price, a founder’s departure, and a massive share buyback program—all while Wall Street debates whether its second-quarter slowdown is a buying opportunity or a warning sign.

A Studio for Pennies on the Dollar

Netflix is in advanced talks to acquire the Radford Studio Center in Los Angeles for roughly $330 million, a fraction of the nearly $2 billion the property fetched in 2021. The previous owner defaulted on its loan after interest rates rose, pushing the asset into the hands of Goldman Sachs, the primary creditor. With Netflix’s lease at the Sunset Bronson Studios set to expire, the timing aligns perfectly with the company’s push to own rather than rent its production infrastructure.

The deal mirrors a broader strategic shift. In New Jersey, Netflix is already building a billion-dollar studio complex on a former military base, backed by generous state subsidies. The Radford purchase would cement its independence from external landlords and give it permanent control over a historic Hollywood lot.

The Stock Takes a Hit—But the Buyback Is Massive

Since mid-April, Netflix shares have shed more than 13%, sliding to around $93 before recovering to $108.18 by last Friday. The sell-off was triggered by a second-quarter revenue forecast of $12.574 billion, slightly below the analyst consensus of $12.63 billion, and an operating margin target of 32.6%—down from 34.1% a year earlier. The company blamed higher content amortization tied to the timing of new releases, and its full-year margin guidance of 31.5% also fell short of the 32% analysts had expected.

To counter the gloom, the board authorized a new $25 billion share repurchase program, on top of remaining funds from an older authorization. There is no set end date for the buybacks. In the first quarter alone, Netflix bought back $1.3 billion in stock, leaving $6.8 billion in remaining authority.

Ad Growth Powers the Narrative

The advertising business is the brightest spot. More than 60% of new subscribers in markets with an ad-supported tier chose the cheaper, ad-funded plan. The number of advertising partners surged 70% year over year to over 4,000. Netflix is targeting roughly $3 billion in ad revenue for 2026—double last year’s figure.

Analysts are divided on what this means for the stock. Morgan Stanley, JPMorgan, and Bank of America all recommend buying the dip, with average price targets around $114. David Joyce of Seaport Research raised his target to $119, citing the ad segment’s momentum. TD Cowen is constructive at $112, expecting the full impact of recent U.S. price increases to show in the third quarter.

On the bearish side, Jeffrey Wlodarczak of Pivotal Research rates the stock a “Hold” with a $96 target, arguing that short-form video platforms like TikTok and YouTube Shorts are eating into streaming growth just as streaming once eroded traditional TV. Wolfe Research and Barclays trimmed their targets to $107 and $110, respectively.

Cash Flow and the Second-Half Test

Free cash flow doubled to $5.1 billion in the first quarter, up from $2.7 billion a year earlier. Netflix lifted its full-year free cash flow forecast to around $12.5 billion, from a prior estimate of $11 billion. The company’s revenue guidance for 2026 remains unchanged at $50.7 billion to $51.7 billion, representing 12% to 14% growth.

The real test comes in the second half of the year, typically the heaviest spending period for content. If the operating margin holds at or above the guided level, the current headwind from content timing should prove temporary. The third-quarter results will reveal whether price increases and ad revenue can close the gap—and which side of the analyst debate is right.