Netflix Shares Under Pressure as Rival Bid Emerges for Warner Bros. Discovery

A surprising and unsolicited counter-bid from Paramount Skydance has thrown Netflix's strategic expansion into disarray, sending its stock sharply lower. Investors are reacting to the prospect of a costly bidding war, with shares of the streaming leader falling approximately 4% on Monday to $96.18—their lowest level since April 2025.

The aggressive move by Paramount Skydance values Warner Bros. Discovery at $108.4 billion. Its all-cash offer of $30 per share directly challenges Netflix's existing mixed cash-and-stock proposal, which is valued at roughly $27.75 per share.

This development represents a significant blow to Netflix's ambitions. The market is now pricing in either a more expensive acquisition contest or the complete loss of a key strategic target. While Netflix had aimed to integrate specific, attractive assets like HBO Max and its film studios, Paramount is pursuing a full takeover that includes Warner's linear television networks.

Paramount CEO David Ellison publicly labeled the Netflix agreement as "inferior" and fraught with regulatory risk. Should Warner Bros. Discovery accept the Paramount offer, Netflix would be entitled to a breakup fee of around $2.8 billion, but its growth strategy centered on the acquisition would be derailed.

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

Political and Regulatory Hurdles Mount

Compounding the challenge is mounting political pressure. On December 8, former US President Donald Trump personally signaled that a merger between Netflix and Warner could be problematic due to the immense market power it would create. Critics, including Senator Elizabeth Warren, have also warned against excessive consolidation in the streaming sector.

Despite the headwinds, Netflix's management has projected confidence. Co-CEOs Ted Sarandos and Greg Peters stated at a recent conference that they remain "super-confident" in closing the deal. However, the combination of a superior cash offer from a rival and a strict antitrust environment is diminishing the probability of success.

Analysts Downgrade on Deal Concerns

The swift reaction from Wall Street analysts reflected the heightened uncertainty, leading to several downgrades:

• Pivotal Research removed its buy recommendation and slashed its price target from $160 to $105. Analyst Jeff Wlodarczak interpreted the acquisition attempt as an admission of structural weakness in the face of growing competition from platforms like TikTok and YouTube.
• Rosenblatt Securities reduced its target to $105, citing regulatory obstacles that could tie up capital for up to 24 months.
• Huber Research went further, advising clients to sell the stock with a $92 price target. The firm called the proposed deal "exorbitant" and risky.

The coming weeks will be critical in determining whether Netflix will raise its financial offer or concede defeat in this high-stakes corporate contest.