Netflix Stock Slides as Muted Outlook, Mega-Deal Overshadow Strong Earnings
Shares fall after the streaming giant beats Q4 estimates but forecasts slower 2026 growth and announces a surprise, multi-billion dollar acquisition of Warner Bros. Discovery assets.
Netflix Inc. (NFLX) shares declined in after-hours trading, as investors looked past strong fourth-quarter earnings and focused on a decelerating growth forecast for 2026 and a stunning, blockbuster acquisition.
The streaming giant’s stock fell approximately 4-5% in extended trading after it projected a slowdown in revenue growth and simultaneously revealed a colossal, all-cash deal to acquire assets from Warner Bros. Discovery for roughly $83 billion. The move, which management says will halt stock buybacks for the foreseeable future, overshadowed a report that surpassed Wall Street’s expectations for the final quarter of 2025.
For its fourth quarter, Netflix posted revenue of $12.05 billion, an 18% year-over-year increase that narrowly beat analyst expectations of $11.97 billion. Earnings per share came in at $0.56, just ahead of the consensus estimate of $0.55. The company also announced it had grown its global subscriber base to 325 million paid members, a significant jump from the 301.6 million it reported at the end of 2024.
Despite the solid performance, the company’s forward guidance proved to be the focal point for investors. Netflix management forecast revenue for the full year 2026 to land between $50.7 billion and $51.7 billion. This represents a projected growth rate of 12-14%, a notable deceleration from the 17% growth seen in 2025. As Seeking Alpha noted, this slower trajectory is fueling concerns about the company's future momentum in an increasingly saturated market.
The more significant surprise, however, was the massive acquisition of Warner Bros. Discovery content assets. While details are still emerging, the all-cash transaction represents a monumental strategic pivot for Netflix, prioritizing content library expansion over short-term shareholder returns. The company explicitly stated that its share repurchase program would be paused to finance the deal, a move that directly contributed to the negative stock reaction.
Analysts were quick to weigh in, framing the deal and the conservative guidance as part of a long-term strategy that will require significant investor patience. The acquisition bolsters Netflix’s content arsenal at a time of fierce competition, but it also introduces substantial integration risk and financial leverage.
"The market is reacting to the dual impact of slowing organic growth and the financial implications of a massive strategic bet," commented one analyst. The acquisition is seen as a defensive and offensive move, securing a vast library of proven content to reduce churn and attract new subscribers.
This strategic shift comes as other Netflix initiatives are bearing fruit. The company’s advertising-supported tier, a key growth driver, generated over $1.5 billion in 2025 and is projected to double to nearly $3 billion in 2026, according to industry reports. The crackdown on password sharing has successfully converted many viewers into paying subscribers, contributing to the strong membership growth in the past year.
Still, the future for Netflix now looks dramatically different. The company is leveraging its market position to make a transformative, landscape-altering purchase. For investors, the narrative has shifted from pure subscriber growth metrics to the complex execution of integrating a massive content portfolio and navigating a more leveraged balance sheet. As The Wall Street Journal reported, the muted outlook has prompted a recalibration of expectations, with the next several quarters being critical in proving the merits of this bold and costly strategy.