Netflix Shares Under Strain Amid Intensifying Bidding War

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Netflix's stock is facing mounting pressure on the markets as a fierce takeover battle for Warner Bros. Discovery (WBD) escalates. The prospect of a significantly more expensive, all-cash bid is weighing on investor sentiment. Currently trading around $88.53, the share price has weakened considerably over the past six months. Investors are now balancing the strategic appeal of acquiring WBD against the substantial financial risks of a potential cash offer.

The primary source of pressure stems from an aggressive competing offer. Paramount Skydance has presented a hostile, all-cash proposal valued at approximately $108.4 billion, or $30 per WBD share. This bid substantially exceeds the terms Netflix had previously arranged. To solidify its financing, a personal guarantee of $40 billion from Oracle co-founder Larry Ellison is reportedly in play, signaling Paramount Skydance's determination to acquire WBD even against management opposition.

Adding to the uncertainty, Paramount has filed a lawsuit in the Delaware Court of Chancery against the WBD board of directors. The suit alleges a breach of fiduciary duty, accusing the board of favoring Netflix's lower offer. This legal challenge complicates the process and may force Netflix to improve its financial terms to secure shareholder approval.

Netflix Considers Shifting to an All-Cash Proposal

In response to these competitive and legal developments, Netflix is reportedly working on revised terms for the acquisition. According to consistent reports, management is considering converting its previous cash-and-stock offer into a pure cash transaction, though a formal all-cash bid has not yet been submitted.

This strategic pivot is triggered by the declining value of the original deal structure. In early December 2025, Netflix agreed to a transaction worth roughly $82.7 billion, offering $23.25 in cash plus $4.50 in Netflix stock per WBD share. A subsequent 12% decline in Netflix's share price has significantly devalued the stock component of that offer.

A fully cash-based proposal would insulate WBD shareholders from Netflix's stock volatility and could streamline regulatory approval. However, this approach would inevitably increase the financial burden on Netflix.

Financial Risks Weigh Heavily on Market Sentiment

The market is clearly reacting to the possibility of a massive cash outlay. To remain competitive in the bidding war, Netflix would likely need to finance a sum well over $85 billion, predominantly through additional debt.

Market analysts highlight that such a debt load could constrain financial flexibility and materially impact earnings per share (EPS) in 2026. Recent share performance reflects this growing skepticism:

• Current Share Price: Approximately $88.53
• Daily Change: –1.98%
• 6-Month Performance: Down roughly 28%
• Market Focus: Leverage risk versus the strategic value of WBD's assets

While acquiring WBD would bring premium content like HBO and DC Studios under Netflix's umbrella, the market is currently fixated on the cost implications. The stock is trading near its lows since the original deal was announced, signaling that many investors view the short-term financial impact of a potential bidding war with caution.

Core Business Performance Provides a Solid Foundation

Away from the merger and acquisition turbulence, Netflix's fundamental operations continue to show strength. Its advertising-supported subscription tier is demonstrating particularly dynamic growth, reaching approximately 190 million monthly active users (MAUs) in November 2025.

Third-quarter advertising revenue climbed 17.2% year-over-year, indicating that the core growth trajectory remains intact and that new revenue streams in advertising are being successfully tapped.

These solid fundamentals provide underlying support for the company's valuation and help limit downside potential. Even if the WBD transaction becomes more costly or falls through, the advertising growth channel remains a significant future revenue driver.

Outlook: Attention Turns to Revised Offer Details

In the near term, however, uncertainty surrounding the final structure of the WBD bid dominates. Netflix shares are moving within a downward trend influenced by acquisition speculation, as the market prices in the risk of a costly contest with Paramount Skydance.

The immediate catalysts for the stock's direction will be the formal submission and precise structure of Netflix's revised offer, along with developments in the Delaware court proceedings. Until clarity emerges on the final price, financing framework, and legal hurdles, the equity is likely to remain susceptible to heightened volatility.