Netflix Surpasses Expectations Yet Faces Stock Decline Due to Warner Bros Acquisition Worries
Netflix outperformed fourth-quarter earnings expectations on Tuesday, recording earnings per share of 56 cents, a cent higher than analysts’ predictions. Revenue also exceeded expectations, hitting $12.05 billion against the estimated $11.97 billion. The streaming behemoth also celebrated a significant achievement, reaching 325 million global paid subscribers by the end of the quarter.
However, despite the earnings triumph, Netflix shares took a hit, falling more than 5% in extended trading. Investors seemed to be more focused on the unsettling forward guidance and the company’s contentious acquisition plans. Netflix announced a temporary halt on share repurchases to fund its proposed $72 billion all-cash acquisition of Warner Bros. Discovery’s HBO Max and film studio assets. This deal has been met with opposition from rival bidder Paramount and has been under regulatory scrutiny.
Looking ahead to 2026, Netflix anticipates revenue to fall between $50.7 billion and $51.7 billion. The company expects to double its ad revenue compared to the previous year. However, the growth of the company’s revenue is predicted to slow down from 16% in 2025 to 12-14% this year. Management also projected a first-quarter profit below analyst predictions, with content costs expected to rise by approximately 10% in 2026.
Source: CNBC