New York, Jan 20, 2026, 16:48 EST — After-hours
- Netflix shares dipped in after-hours trading following a first-quarter forecast that missed FactSet estimates.
- The stock ended the regular session a bit lower, then fell further following the report.
- Investors are weighing Netflix’s all-cash bid for Warner Bros. and the schedule for a shareholder vote.
Netflix (NFLX) shares slipped in after-hours trading Tuesday after the company forecast first-quarter earnings per share below FactSet estimates, despite beating fourth-quarter expectations. The stock ended the regular session down 0.8% at $87.26 before falling roughly 4.9% to $82.98 in after-hours, which runs after the 4 p.m. close. (MarketScreener)
The shift is significant since Netflix stands as a key indicator for both paid streaming and ad-supported models. Here, the guidance carries more weight than the headline numbers. This after-hours dip is now shaping the outlook for Wednesday’s trading, as investors weigh whether the miss is just a timing blip or a deeper problem.
Deal risk has crept back into the picture. Netflix switched to an all-cash bid for Warner Bros. Discovery’s studio and streaming assets, offering $27.75 per share and maintaining the $82.7 billion valuation. The move aims to edge out rival Paramount Skydance, according to a filing Reuters reported. Harris Oakmark portfolio manager Alex Fitch noted the updated deal “only ramps up the pressure,” while Hargreaves Lansdown analyst Matt Britzman called the shift “a smart pivot” that “strips away uncertainty” but “does nothing to ease regulatory scrutiny.” (Reuters)
Netflix projected first-quarter diluted EPS at $0.76, with revenue hitting $12.157 billion, according to its shareholder letter. For 2026, the streaming giant expects revenue between $50.7 billion and $51.7 billion, aiming to nearly double ad revenue and reach an operating margin of 31.5%. The company also reported surpassing 325 million paid memberships in the quarter and posted fourth-quarter revenue of $12.051 billion, alongside diluted EPS of $0.56.
Attention shifted sharply from subscriber numbers to the factors boosting viewing and pricing power. Nielsen reported a 10% jump in Netflix’s monthly viewership in December, fueled by the “Stranger Things” final season and two NFL games streamed on Christmas Day, Reuters said. (Reuters)
Financing is also in play. Netflix’s 8-K revealed an incremental commitments deal, pushing senior unsecured bridge term loan commitments to $42.2 billion. It also detailed breakup fees that could reach billions if the deal collapses under specific conditions. (SEC)
Netflix has stepped up its regulatory efforts, stressing that the entertainment sector is “intensely competitive.” The company highlighted competitors like YouTube, Amazon, and Paramount+ in its bid to secure approval for the Warner deal, according to the Financial Times. (Financial Times)
The downside is clear: a weaker ad market or rising content expenses might tighten near-term margins right when Netflix is trying to finance a big cash deal. Regulators could delay things, even if shareholders give the green light. A drawn-out approval process would shift investor attention to financing costs and execution risks, instead of the core streaming business.
Traders will be watching closely to see if Wednesday’s cash-market open continues the after-hours drop and whether analysts adjust their first-quarter forecasts. Netflix and Warner announced the revised deal structure should allow Warner shareholders to vote on the transaction by April 2026. (Netflix)
