While Netflix’s latest quarterly results demonstrated underlying strength, investor focus has shifted decisively to the financial burden of its colossal bid for Warner Bros. Discovery. The streaming giant’s stock continues to face headwinds as the market weighs the implications of an $82.7 billion all-cash offer against its core business performance.
A Slowing Growth Trajectory Amid Solid Fundamentals
The company’s fourth-quarter 2025 performance exceeded Wall Street’s forecasts. Revenue reached $12.05 billion, with adjusted earnings per share coming in at $0.56. However, a clear normalization in subscriber growth is emerging. Netflix added approximately 23 million new paying subscribers in the past year, a significant deceleration from the roughly 41 million gained in 2024. The service now boasts a global total of 325 million paying customers.
The Financial Weight of the Warner Bros. Discovery Pursuit
The dominant narrative for shareholders is the intense bidding war for the assets of Warner Bros. Discovery. Netflix has revised its offer to a pure cash proposition of $82.7 billion, aiming to outmaneuver competing bidder Paramount Skydance. This strategic move carries immediate financial consequences. To amass liquidity for the potential deal, the company has suspended its share repurchase programs. Furthermore, it has secured substantial bridge financing, a process that has already incurred $60 million in costs solely for securing the funding commitments.
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Advertising Momentum Contrasts with Cautious Guidance
A key bright spot is the rapid expansion of Netflix’s advertising business. The segment generated over $1.5 billion in revenue in 2025, and according to Co-CEO Greg Peters, is projected to double to $3 billion in the coming year. The ad-supported subscription tier finished the year with 190 million monthly active users.
Despite this progress, the company’s forward-looking statements disappointed the market. Its revenue guidance for 2026, projected between $50.7 billion and $51.7 billion, sits at the lower end of analyst expectations. This suggests that growth may moderate, even with planned expansions into live sports content, including NFL games and WWE Raw.
Regulatory Hurdles and Portfolio Potential
The path forward for Netflix’s stock price is now heavily dependent on regulatory approval. The proposed Warner Bros. Discovery acquisition must clear significant hurdles with competition authorities in both the United States and the European Union. A successful deal would dramatically expand Netflix’s content library with iconic franchises such as “Harry Potter” and “Game of Thrones.” Until that outcome is certain, however, the substantial financing costs and regulatory uncertainty remain a persistent overhang on the equity.
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