Netflix Shares Under Pressure Amid Landmark Acquisition Bid

Netflix’s proposed acquisition of major assets from Warner Bros. Discovery represents one of the largest potential media mergers in history. This strategic pivot marks a decisive departure from the company’s longstanding organic growth model, generating palpable uncertainty among investors. The streaming giant’s stock significantly underperformed the broader market in the fourth quarter, a period that also saw a fierce bidding war emerge with rival consortium Paramount Skydance.

Market Performance Reflects Deal Complexities

The financial markets have reacted to the deal’s intricacies. Netflix shares are currently trading around $93, having shed approximately 20% of their value in Q4. This decline contrasts sharply with the S&P 500’s gain of over 3% during the same period. The stock now sits more than 30% below its July 2025 peak.

Analysts point to a confluence of factors driving the downward pressure:
* Anticipated rigorous antitrust scrutiny in both the United States and European Union
* Opposition from the Writers Guild of America
* Concerns regarding post-transaction debt levels
* Uncertainty surrounding the valuation of the to-be-spun-off cable network business

From a technical analysis perspective, market observers note the stock is approaching oversold territory, with a potential support zone identified between $92.71 and $93.77.

The Warner Bros. Discovery Transaction in Detail

On December 5, Netflix announced its intention to acquire the film and TV studios of Warner Bros. Discovery (WBD) along with the HBO Max and HBO streaming platforms. The deal values the target company with an enterprise value of $82.7 billion (equity value $72 billion).

Key terms of the offer include:
* A bid of $27.75 per WBD share, comprising cash and stock
* A cash component of $23.25 per share and a stock component of $4.50 in Netflix shares
* An expected completion timeline of 12 to 18 months, pending regulatory approvals
* Targeted annual cost synergies of $2 to $3 billion from the third year post-closing
* The spin-off of WBD’s cable networks (CNN, TNT, Discovery) into a standalone entity named “Discovery Global”

On December 17, the WBD board of directors unanimously recommended shareholders accept the Netflix offer. Simultaneously, it rejected a competing hostile bid from Paramount Skydance valued at $108.4 billion.

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

Paramount Skydance Continues Its Pursuit

Despite the WBD board’s recommendation, the Paramount Skydance consortium remains undeterred. The group is appealing directly to WBD shareholders, maintaining a competing all-cash offer of $30 per share. This bid is backed by a personal guarantee of $40.4 billion from Oracle co-founder Larry Ellison and remains open until January 21, 2026.

In a letter to shareholders, Netflix Co-CEO Ted Sarandos defended the transaction’s structure, emphasizing:
* Committed debt financing from Wells Fargo, BNP, and HSBC
* The absence of any foreign sovereign wealth fund involvement
* A clear regulatory pathway from a corporate perspective, with no CFIUS review required

Netflix further secured $25 billion in new bank financing on December 22, replacing a portion of an initially committed $59 billion bridge loan.

Regulatory Scrutiny and Analyst Perspectives

The merger faces substantial political and antitrust headwinds. U.S. Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal have formally urged the Department of Justice to conduct an exceptionally stringent review. Their concern stems from the combined entity’s potential control of roughly 43% of the global Subscription-Video-on-Demand subscriber base.

Notwithstanding these uncertainties, several research firms maintain positive outlooks. Morgan Stanley, Jefferies, and Wolfe Research have all reaffirmed their buy-equivalent ratings. Some price targets extend as high as $152, indicating analysts see significant upside potential should the deal clear regulatory hurdles and achieve projected synergies.

Strategic Rationale: Scale Through Consolidation

The acquisition would create a streaming behemoth with approximately 430 million global subscribers, dramatically widening Netflix’s lead over Disney (221 million) and Amazon (200 million). In the critical U.S. market, the combined platform would reach about 139 million subscribers.

From a content perspective, Netflix would gain access to a deep portfolio of premium brands and franchises, including Harry Potter, Game of Thrones, The Sopranos, and the DC Universe. Management has pledged to maintain Warner Bros.’ theatrical release strategy and protect the premium brand positioning of HBO.