Netflix (NFLX) Acquires Warner Bros. Discovery (WBD), Stock Down 20%
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: Fool
- Unclear Acquisition Rationale: Netflix announced its acquisition of Warner Bros. Discovery on December 5, but the stock has since dropped 20%, indicating investor skepticism about the deal's benefits despite management's assurances.
- Significant Financial Burden: The acquisition will cost Netflix approximately $72 billion in cash and incur $10.7 billion in net debt, representing nearly six times its current net income, which could strain its financial stability.
- Lukewarm Market Reaction: Despite providing solid guidance for 2026, Netflix's stock fell about 5% in after-hours trading following the earnings report, reflecting concerns over the acquisition and doubts about future growth.
- Limited Content Library Appeal: While Warner Bros. Discovery has an attractive content library, its substantial debt from the AT&T acquisition and poor business performance raise questions about whether Netflix can justify the acquisition's cost to regain investor confidence.
Analyst Views on NFLX
Wall Street analysts forecast NFLX stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for NFLX is 129.47 USD with a low forecast of 92.00 USD and a high forecast of 152.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
38 Analyst Rating
27 Buy
9 Hold
2 Sell
Moderate Buy
Current: 88.000
Low
92.00
Averages
129.47
High
152.50
Current: 88.000
Low
92.00
Averages
129.47
High
152.50
About NFLX
Netflix, Inc. is a provider of entertainment services. The Company acquires, licenses and produces content, including original programming. It provides paid memberships in over 190 countries offering television (TV) series, films and games across a variety of genres and languages. It allows members to play, pause and resume watching as much as they want, anytime, anywhere, and can change their plans at any time. The Company offers members the ability to receive streaming content through a host of Internet-connected devices, including TVs, digital video players, TV set-top boxes and mobile devices. It is engaged in scaling its streaming service, such as introducing games and advertising on its service, as well as offering live programming. It is developing technology and utilizing third-party cloud computing, technology and other services. The Company is also engaged in scaling its own studio operations to produce original content.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
