LOS ANGELES, Jan 20, 2026, 13:50 PST
- Revenue hit roughly $12.1 billion in the holiday quarter, beating forecasts; shares slipped in after-hours trading
- Netflix reported surpassing 325 million paid memberships this quarter, up from 300 million a year ago
- The company is moving forward with an $82.7 billion all-cash offer for Warner Bros. Discovery’s assets amid growing competition from rival bids
Netflix barely surpassed Wall Street’s revenue forecasts for the holiday quarter and reported surpassing 325 million subscribers. Still, shares fell roughly 4% in after-hours trading Tuesday as investors focused on the expenses and risks tied to its planned Warner Bros. acquisition. Reuters
The timing is crucial as Netflix ramps up live programming and sports amid a U.S. streaming market that’s drifting further from cable and broadcast, intensifying the battle for scale and top-tier franchises. At the same time, the company is pitching investors on a rare, once-in-a-generation acquisition while working to maintain steady growth in a subscription business that’s reaching maturity.
Netflix reported a 17.6% rise in revenue year-on-year, hitting $12.051 billion in the October-December quarter, according to its shareholder letter. Diluted earnings per share came in at 56 cents, while paid memberships surpassed 325 million during the period.
Nielsen linked the spike in Netflix viewing to the final season of “Stranger Things” and the streamer’s NFL games on Christmas Day. Netflix also highlighted higher pricing and rising ad sales as key growth factors in its forecast commentary.
Streaming hit a new high, accounting for 47.5% of U.S. TV usage in December, according to Nielsen. YouTube alone grabbed 12.7% of that viewing. Netflix boosted numbers with its NFL games and “Stranger Things,” driving total streaming minutes to 55.1 billion on Christmas Day. The data highlights the accelerating shift of live sports to online platforms. Reuters
Netflix projects revenue between $50.7 billion and $51.7 billion for 2026, with advertising revenue set to nearly double. The company aims for a 31.5% operating margin—operating profit as a percentage of sales—and noted that the forecast factors in acquisition-related costs and increased content amortization, the accounting expense tied to the consumption of shows and films.
The earnings report came just hours after Netflix and Warner Bros. Discovery announced an amendment to their merger agreement, switching to an all-cash deal valued at $27.75 per WBD share—keeping the price unchanged. The companies said they expect a shareholder vote on the deal by April, with financing set to come from cash, credit facilities, and committed financing. s22.q4cdn.com
“Our revised all-cash agreement will speed up the timeline to a stockholder vote and offer more financial certainty,” Netflix co-CEO Ted Sarandos said. WBD CEO David Zaslav described the deal as a union of “two of the greatest storytelling companies in the world,” according to the companies’ statement.
The move seeks to block a competing offer from Paramount Skydance, which has been aggressively courting shareholders and pursuing legal action as the fight for Warner assets intensifies. “This new agreement only ramps up the pressure,” said Alex Fitch, portfolio manager at Harris Oakmark, a major Warner investor, noting that the bidding war “may not be over.” Reuters
Emarketer analyst Ross Benes predicts Paramount will continue pressing shareholders unless it sweetens its offer. Matt Britzman, senior equity analyst at Hargreaves Lansdown, described Netflix’s move to an all-cash deal as “a smart pivot,” but added it “does nothing to ease regulatory scrutiny,” Reuters reported.
Several risks could trip this up. Regulators might drag their feet or outright block a deal that would tighten Hollywood’s grip on power. Shareholder calculations could also shift if markets turn volatile or if Paramount tweaks the terms at the eleventh hour. Netflix has already warned about acquisition costs impacting its margin outlook, and it’s tapped bridge financing—short-term cash used to cover the gap before locking in longer-term funding.
Netflix, meanwhile, is focused on driving operating momentum with more ads, live events, and fresh ventures like cloud-streamed games. Yet the stock’s reaction suggests investors remain uncertain if a strong quarter alone justifies such a big move.
