Netflix Faces Dual Challenges: Revised Acquisition Bid and High-Stakes Earnings

Investors are scrutinizing Netflix from two critical angles this week. The streaming giant has fundamentally restructured its multi-billion dollar proposal for Warner Bros. Discovery (WBD), while simultaneously preparing to release a quarterly earnings report that could trigger significant stock price volatility.

After the U.S. market closes today at approximately 4:45 PM ET, Netflix will unveil its financial results for the fourth quarter ending December 31, 2025. Options market pricing suggests an anticipated share price movement of around 7% following the release, indicating elevated investor uncertainty.

Key consensus estimates for Q4 2025 include:

• Revenue: Approximately $11.97 billion, representing year-over-year growth of about 17%.
• Earnings Per Share (EPS): $0.55, compared to $0.43 in the prior-year period.
• Subscriber Growth: Net additions are projected to be between 10 million and 14.2 million customers.
• Operating Margin: Management had previously guided to a 23.9% margin for the quarter. Observers will watch for signs that the full-year margin is trending toward 29%.

These metrics are viewed as essential for determining whether the market will have confidence in Netflix's ability to manage the substantial investment and debt associated with its planned WBD acquisition.

Overhaul of the Warner Bros. Discovery Offer

In a major strategic shift announced Tuesday, Netflix has reconfigured the terms of its proposed takeover of Warner Bros. Discovery. The revised offer is now an all-cash proposal, abandoning an earlier structure that included both cash and stock components.

The revised offer's key terms are:

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

• Offer Price: $27.75 per WBD share in cash.
• Transaction Value: Roughly $82.7 billion in enterprise value.
• Financing: The committed bridge financing has been increased from $34 billion to $42.2 billion.
• Timeline: The shareholder vote on the deal is expected to be moved forward to April 2026.

This move to a pure cash bid is a direct response to a competing, unsolicited offer from Paramount Skydance, which bid $30 per share in cash. Despite the lower per-share price, WBD's board of directors has unanimously endorsed the Netflix deal.

Board members cited the projected post-merger debt structure as a decisive factor. Under Netflix's ownership, the combined entity is expected to maintain a leverage ratio below 4x EBITDA, with total debt of approximately $85 billion. In contrast, decision-makers anticipate a higher leverage ratio and greater balance sheet risk under a potential Paramount deal scenario.

Market Performance and Analyst Outlook

During today's trading session, Netflix shares are trading in a range of $88 to $89.30, showing a moderate gain of about 1.5%. However, the longer-term trend remains negative. Since the initial announcement of the WBD transaction in December 2025 and the Q3 report in October, the stock has lost approximately 30% of its value.

This places the share price well below its 52-week high of $134.12. The primary concerns driving the sell-off revolve around the significant debt required to fund the $82.7 billion acquisition and the operational complexity of integrating two major media conglomerates.

Analyst Perspectives Retain Optimism

Despite the share price decline, several market analysts maintain a positive outlook, pointing to the company's underlying fundamentals.

• TipRanks Consensus: A "Moderate Buy" rating with an average price target of $126.33, implying a potential upside of over 40%.
• Wedbush: Reiterates an "Outperform" rating with a $115 price target.
• KeyBanc: Adjusts its price target to $110.

Some market participants believe the shift to an all-cash offer could provide stability for Netflix's stock by eliminating the dilutive effect of a stock-based component. In the immediate term, however, the direction of Netflix shares will likely be dictated by today's quarterly results and management's commentary regarding the WBD integration strategy and the planned path for debt reduction.