Market Jitters Over Netflix’s Acquisition Ambitions

Netflix shares are experiencing significant downward pressure in the equity markets. Investor sentiment is currently dominated by the proposed multi-billion dollar acquisition of assets from Warner Bros. Discovery, overshadowing the company's otherwise solid operational performance. With the stock price declining markedly over recent weeks, a critical question emerges: is the market's skepticism warranted?

The fundamental business performance presents a stark contrast to the share price trajectory. Third-quarter revenue demonstrated a year-over-year increase of 17%. The advertising segment is showing particular dynamism, with related revenues on track to double by 2025.

Content continues to deliver measurable success, underpinning the core strategy:
* Stranger Things: The first volume of Season 5 amassed approximately 103 million views within its initial four-week window.
* Theatrical Release: The series finale generated between $25 million and $30 million in box office revenue.
* Live Events: The NFL Christmas game featuring the Detroit Lions versus the Minnesota Vikings attracted an average U.S. audience of 27.5 million viewers.

These metrics affirm that Netflix's content strategy effectively drives engagement and opens additional revenue streams.

The Source of Investor Anxiety: A Mega-Deal

The center of current market uncertainty is the planned purchase of Warner Bros. Discovery assets. The transaction carries an equity value of approximately $72 billion, with an enterprise value reaching $82.7 billion.

Market participants are primarily concerned with the deal's execution timeline and regulatory hurdles. The integration period is estimated to last 12 to 18 months, with final closing contingent on a regulatory separation anticipated in the third quarter of 2026. This prolonged transition phase elevates perceived implementation risk, deterring some institutional investors.

Political headwinds are also forming. U.S. Senator Elizabeth Warren has called for a review by the Department of Justice (DOJ), amplifying fears of potential antitrust conditions or significant delays.

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

Direct Communication to Subscribers

Concurrent with the stock correction, Netflix has proactively engaged in customer communication. The company is currently emailing subscribers with a core message: "Nothing changes for you today."

It clarifies that HBO Max and Netflix will remain separate platforms until the transaction receives full regulatory approval. This initiative aims to limit customer confusion and prevent potential subscription cancellations during the interim period.

Valuation and Technical Perspective

Following a 10-for-1 stock split in November 2025, the shares are now trading in a range between $90.81 and $94.50. The technical picture appears weak, with the price currently below key moving averages.

The recent sell-off has, however, made the valuation somewhat more attractive. The price-to-earnings (P/E) ratio now stands near 38, with the forward P/E at approximately 29. Some market analysts perceive this as a potential entry point, though they caution that this outlook depends on the Warner asset integration proceeding without major regulatory interference.

Recent Key Figures:
* Last Closing Price: $90.99
* Daily Decline: 2.95%
* Four-Week Loss: ~17%
* Deal Size: ~$72B (Equity Value), $82.7B (Enterprise Value)

Presently, the market is assigning greater weight to the execution and regulatory risks of the $82 billion deal than to the ongoing operational growth. This risk assessment is reflected in the persistent weakness of the stock price and is likely to continue weighing on the shares until clearer signals emerge regarding the acquisition's progression.