New York, Jan 21, 2026, 10:14 EST — Regular session
- Netflix shares dropped roughly 3%, with investors zeroing in on the Warner Bros deal and the company’s funding strategy.
- The company projected revenue growth of 12%-14% for 2026 and announced a pause on share buybacks.
- Coming soon: Warner Bros Discovery plans a shareholder vote, targeting April 2026 for the event.
Netflix shares dropped around 3% in early U.S. trading Wednesday, continuing their slide after earnings as investors digested the streaming giant’s bid for Warner Bros. Discovery. The stock was down $2.62 at $84.64, having earlier fallen close to 8% to $80.40.
The selling highlights just how fast Netflix’s narrative has shifted. Once driven by reliable streaming revenue and buybacks, the stock is now reacting to deal risk and concerns over how long cash remains locked up.
What really counts now is that the quarter was never the main focus. Investors have their sights set on 2026: slower growth, a need for ad revenue to pick up, and a balance sheet that could shift if the Warner deal stalls or costs more than expected.
Netflix reported fourth-quarter revenue up 18% to $12.05 billion, with diluted earnings at 56 cents per share and paid memberships surpassing 325 million. The company projects 2026 revenue between $50.7 billion and $51.7 billion, expects ad revenue to roughly double, and aims for a 31.5% operating margin. This margin target factors in about $275 million in acquisition-related expenses. 1
Netflix has pivoted its Warner offer to an all-cash bid of $27.75 per share as it counters Paramount Skydance’s rival proposal, also hitting pause on share buybacks to shore up cash. The streamer secured a $59 billion bridge loan—short-term financing set to be replaced before closing—and increased it by $8.2 billion, incurring around $60 million in financing costs. CFO Spencer Neumann told investors ad revenue is expected to hit roughly $3 billion. Michael Ashley Schulman, CIO at Running Point Capital Advisors, noted Netflix often prioritizes “what’s right for long-term growth,” while Gabelli Funds’ portfolio manager John Belton observed that “investment cycles ebb and flow.” 2
Co-CEO Greg Peters said Warner would help Netflix strengthen its theater presence, noting that “when we got into the hood,” they found “several things” that stood out as “really exciting.” Ted Sarandos described the bid as “pro-consumer” and “pro-worker,” highlighting competition from YouTube and Amazon as a key reason to secure a larger content library. 3
Warner Bros Discovery shares climbed 0.8% to $28.46, while Paramount Skydance remained largely flat. This divergence highlights where investors see the edge: WBD is trading with a premium, whereas Netflix shareholders are holding back, awaiting clearer signals on pricing and returns.
Netflix’s forecast points to better margins, yet hefty content investments and major deals could quickly drain cash.
The core business remains solid. Nielsen reported that streaming accounted for a record 47.5% of U.S. TV usage in December, driven by Netflix’s Christmas Day NFL games and the last season of “Stranger Things,” which racked up over 15 billion viewing minutes. 4
The biggest threat remains regulatory approval and timing. According to a Netflix filing, either party can walk away if the deal is blocked or doesn’t close by March 4, 2027. The contract also includes a $5.8 billion fee Netflix must pay if antitrust or foreign regulatory issues derail the deal, plus a $2.8 billion fee WBD would owe Netflix under certain exit conditions linked to rival bids and recommendations. 5
Investors are gearing up for the WBD shareholder vote, now pushed to April 2026 following WBD’s filing of a preliminary proxy statement. Traders will be on the lookout for any fresh bids from Paramount Skydance, as well as clues about whether Netflix can resume buybacks without harming its investment-grade credit standing. 6
