Netflix shares have been losing ground in recent weeks. After the publication of its financial results and outlook for the next quarter, they fell by almost five percent. Investors were not so much concerned about the figures themselves as about the future of the company—in particular, the planned acquisition of Warner Bros. Discovery, which carries regulatory risks and fierce competition.
Investors are closely watching Netflix’s results today. And it seems they don’t like what they see.
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Nearly 40% drop from summer highs
Wednesday’s decline extended a downward trend that has been going on for several months. Netflix shares are currently about 40% lower than their highs from last summer. The main reason is uncertainty surrounding the planned acquisition of Warner Bros. Discovery (WBD).
The transaction faces likely regulatory scrutiny, and a competing bid has emerged from Paramount Skydance (PSKY). This has forced Netflix to revise its original offer and switch to an all-cash form to deter its rival. And that is what is worrying investors.
Netflix has announced that it will temporarily suspend its share buyback program in order to build up sufficient cash reserves for the acquisition. For the market, this is a signal that the company will be more cautious in the coming months—and that returning capital to shareholders will take a back seat.
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Better results, worse outlook
The fourth quarter figures themselves were not bad. Netflix reported revenue of $12.05 billion, while analysts had expected $11.97 billion. Earnings per share reached $0.56, which is one cent more than the market had anticipated. The problem came with the outlook.
The company announced that it expects earnings per share of $0.76 on revenue of $12.16 billion in the current quarter. According to a Visible Alpha survey, analysts had expected EPS of $0.82 and revenue of $12.19 billion. The difference is not dramatic, but in an environment of increased uncertainty, every detail matters.
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The market is waiting for clarity
Analysts agree that pressure on stocks may continue at least until spring. According to Wedbush, volatility should continue at least until April, when Netflix will release its first-quarter results and shareholders will vote on the approval of the Warner Bros. Discovery acquisition. William Blair also points out that “the fundamentals of the business remain solid,” but the uncompleted transaction will keep the stock under pressure until the situation becomes clearer.
Nevertheless, both investment firms are maintaining their “outperform” recommendation, suggesting that Netflix could rebound after the deal is completed. This optimism is supported by the Wall Street consensus—the average target price per share according to Visible Alpha is $115, which would represent a more than 26% increase from the current level.
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What can small investors take away from this?
The Netflix story shows that today’s market looks not only to the past but above all to the future. While the company has delivered solid results, uncertainty surrounding a major acquisition, regulatory risks, and changes in financial strategy (including the suspension of buybacks) is creating tension.
For long-term investors, the current decline may represent an opportunity. For more conservative players, on the other hand, it is a warning that the stock may remain volatile for several more months.
The spring will be decisive, as will whether Netflix can actually acquire Warner Bros. without jeopardizing market confidence. Until then, every new piece of data, every statement from management, and every regulatory move will be closely watched.
Sources:
https://s22.q4cdn.com/959853165/files/doc_financials/2025/q4/FINAL-Q4-25-Shareholder-Letter.pdf
