Regulatory Clouds Gather Over Netflix’s Acquisition Ambitions

Netflix shares found a temporary reprieve at the end of last week, halting a multi-day decline. However, fresh regulatory concerns emerged over the weekend, threatening to derail the streaming giant's planned mega-acquisition of Warner Bros. Discovery (WBD) and potentially erase its modest recovery.

Trading activity in the coming days will be pivotal. Should the newly voiced regulatory skepticism gain traction, the stock could retest a key technical support level at $82. If buyers can instead refocus the market on fundamental valuation, a base might form. The company's next quarterly results are anticipated on April 15, 2026.

The stock managed to close Friday's session at $86.12, recovering from a new 52-week low. This stabilization appears fragile. On Saturday, FCC Commissioner Brendan Carr expressed "legitimate competition concerns" regarding the proposed deal. This official skepticism complicates Netflix's position, as it is already engaged in a fierce bidding contest.

The High-Stakes Bidding War and Market Reaction

Netflix recently increased its all-cash offer for WBD to $27.75 per share, valuing the target company at approximately $82.7 billion. The conglomerate is in direct competition with Paramount Skydance, which is pursuing a hostile takeover bid of $30 per share. Since the deal's announcement in December 2025, Netflix's equity has shed roughly 23% of its value, with investors apprehensive about steep integration costs and the significant capital outlay.

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

Solid Operational Performance Amidst Uncertainty

Operationally, Netflix delivered robust fourth-quarter figures. Revenue climbed 18% to $12.05 billion, while earnings per share surpassed expectations at $0.56. The advertising business emerged as a particular bright spot, with segment revenue multiplying by a factor of 2.5 in 2025 to exceed $1.5 billion. Management forecasts this segment will double once again in 2026.

The question remains whether this strong core performance can offset acquisition anxieties. The company's outlook was measured. For 2026, Netflix projects revenue growth between 12% and 14%, marking a deceleration from the previous year's 16% growth. Furthermore, a planned 10% increase in programming expenditures to around $20 billion is expected to pressure margin expectations.

Analysts Spot a Potential Entry Point

The market correction has now priced in numerous risks. Valuation has contracted to a 2026 price-to-earnings (P/E) ratio of approximately 26 to 27—significantly more attractive than six months ago. Despite the regulatory headwinds, Bernstein Research reaffirmed its "Outperform" rating on Saturday with a $115 price target. This implies an upside potential of about 34% from current levels.