Netflix Shares Under Pressure Amid High-Stakes Acquisition Battle

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The stock of streaming giant Netflix is experiencing significant turbulence as it navigates one of the entertainment industry's most substantial takeover contests. Investor sentiment has been weighed down by a combination of weak quarterly performance and the uncertainties surrounding its proposed $82.7 billion acquisition of Warner Bros. Discovery. The central question for the market is whether the company's operational strength can eventually outweigh the risks associated with this major deal.

Netflix has been among the poorest performers in the mega-cap segment during the fourth quarter of 2025. Its shares have declined by approximately 20% in this period, starkly underperforming the S&P 500 index, which managed to gain over 3%.

Having reached an all-time high of $134.12 in late June 2025, the stock has since retreated by more than 30%. It closed yesterday's session at $93.78, marking a daily loss of 0.39%. This downward pressure coincides with the market's attempt to price in the potential consequences of the planned Warner Bros. takeover.

Key Netflix Metrics:

• Market Capitalization: $400 billion
• 52-Week High: $134.12 (June 30, 2025)
• 52-Week Low: $82.11 (April 7, 2025)
• P/E Ratio (TTM): 39.17
• Revenue (TTM): $43.4 billion
• Net Margin: 24.05%

The Paramount Skydance Counterbid Intensifies Competition

The planned acquisition of Warner Bros. Discovery is currently the primary driver of share price volatility. Netflix's offer values the target at $82.7 billion, comprising $23.25 in cash and $4.50 in Netflix stock for each Warner Bros. Discovery share.

While the Warner Bros. Discovery board officially recommended on December 17 that shareholders reject a competing $108 billion offer from Paramount Skydance and support the Netflix proposal, the bidding war has escalated. The rival bid has heightened concerns that prices are being pushed into overvalued territory. Following the deal's announcement, Rosenblatt Securities downgraded Netflix stock to "Neutral," with analyst Barton Crockett citing the transaction's risk profile.

Strategically, the merger would represent a transformative move, combining Netflix's streaming platform with Warner's vast content library—including HBO, HBO Max, and franchises like DC Entertainment, Harry Potter, and Game of Thrones. However, regulatory scrutiny is expected to become a major hurdle, as the combined market share in streaming could raise antitrust concerns, potentially complicating and delaying approval processes.

Should investors sell immediately? Or is it worth buying Netflix?

Operational Strength and Divergent Analyst Views

Despite near-term pressures, many market experts maintain long-term confidence. Currently, 25 analysts rate the stock as "Strong Buy." The average price target stands at $129.68, implying an upside potential of roughly 37% from current levels, with some individual estimates reaching as high as $152.50.

From a technical analysis perspective, there are early indications that selling momentum may be waning. The Relative Strength Index (RSI) is approaching oversold territory, while a bullish crossover pattern is forming on the MACD indicator. Chart support is currently seen above the $90 level, which could provide a base for a potential recovery.

Operationally, Netflix continues to demonstrate solid fundamentals. Third-quarter 2025 revenue increased to $11.5 billion, a 17% year-over-year gain. The operating margin expanded to nearly 30%. Management has forecast further improvements, driven particularly by growing advertising revenue and price adjustments.

Upcoming Q4 Earnings as a Critical Catalyst

Netflix is scheduled to release its fourth-quarter 2025 results on January 20, 2026. Following an 10-for-1 stock split in November 2025, the split-adjusted analyst consensus for earnings per share is $0.55, equivalent to $5.50 pre-split. Netflix's own pre-split guidance for Q4 was $5.45 per share.

The company has projected Q4 revenue of approximately $12 billion, which would represent year-over-year growth of 16.8%. This upcoming report is being closely watched, especially after October's disappointing results, where the Q3 EPS of $5.87 fell notably short of the $6.97 consensus.

Two key factors will likely dictate the share price direction in the coming weeks: first, whether Netflix's Q4 earnings can re-establish its previous growth momentum and close the earnings gap from the third quarter; and second, how convincingly management can outline a path to integrate Warner Bros. while maintaining stable subscriber growth. The answer will determine if the equity can rally back toward its 2025 highs or if the current pressure will persist into the new year.