New York, Jan 21, 2026, 16:35 (EST) — After-hours
- NFLX dipped further in late trading Wednesday, continuing its slide following the earnings report.
- Netflix forecasted stronger revenue growth in 2026 and a boost in operating margin, anticipating advertising revenue to nearly double.
- After Netflix shifted to an all-cash bid, investors have been closely watching the Warner Bros. Discovery deal timeline.
Netflix (NFLX) shares slipped $1.88, or 2.2%, to $85.36 in after-hours trading Wednesday. Earlier, the stock dipped as low as $80.40 before clawing back some ground.
After Tuesday’s quarterly report, Netflix shares dropped more than 4% in after-hours trading despite beating Wall Street expectations. The focus quickly shifted to the ongoing bidding war for Warner Bros. Discovery. In response, Netflix announced it would pause its share buyback program and increase its bridge loan facility by $8.2 billion to a total of $59 billion—typically a move aimed at financing acquisitions. “Netflix has not shied away from doing what’s right for long-term growth,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. Reuters
Investors are juggling two narratives right now: the steady grind of ads and subscriptions, alongside a blockbuster deal that could upend the balance sheet. Operating margin — the ratio of operating profit to revenue — and cash flow are drawing as much focus as subscriber growth.
Netflix reported fourth-quarter revenue of $12.051 billion and diluted earnings per share of $0.56 in its shareholder letter, announcing it surpassed 325 million paid memberships. The company projects first-quarter revenue at $12.157 billion and outlined a 2026 revenue target between $50.7 billion and $51.7 billion, aiming for a 31.5% operating margin. Advertising revenue more than doubled, climbing over $1.5 billion in 2025, while free cash flow — cash remaining after investments — is expected to hit about $11 billion in 2026.
Co-CEO Greg Peters told the earnings interview that the advertising business is expected to “roughly double again in 2026 to about $3 billion.” He added that this growth fits into the company’s strategy to rely more on ads alongside subscriptions and pricing.
Netflix has switched to an all-cash bid of $27.75 per share for Warner Bros. Discovery’s studio and streaming businesses, holding firm to the $82.7 billion total valuation. The move aims to block Paramount Skydance’s competing offer, which expires on Jan. 21. “This new agreement only ramps up the pressure,” said Alex Fitch, portfolio manager at Harris Oakmark. Emarketer’s Ross Benes added the rival bid will need to increase or risk being “window dressing.” Matt Britzman, senior equity analyst at Hargreaves Lansdown, called the cash offer a “smart pivot” but noted it won’t reduce regulatory hurdles. Reuters
But the deal carries risks. Regulators might slow the approval process, and any slip in subscriber growth or advertising demand would tighten the margin to cover rising financing and content expenses—before integration challenges even come into play.
Netflix and Warner Bros. Discovery announced the updated deal framework aims for WBD shareholders to cast their votes by April 2026. The financing plan will tap into cash reserves, credit lines, and committed funds. Market watchers are focused on this voting schedule and initial feedback from U.S. and European antitrust authorities.
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