What Happened?
Shares of streaming video giant Netflix (NASDAQ: NFLX) fell 4.4% in the morning session after investor concerns mounted over its planned $82.7 billion acquisition of Warner Bros. Discovery's film and TV studios.
The deal, which included assets like HBO, was viewed as expensive, with Netflix planning to pay a price described by one source as "exorbitantly high." The announcement drew immediate negative reactions, including analyst downgrades. Rosenblatt lowered its rating on the stock to Neutral from Buy, while Huber Research downgraded it to Sell, calling the deal “very risky.”
Adding to the uncertainty, Paramount launched a competing hostile takeover bid for Warner Bros., going directly to shareholders. The acquisition also faced potential regulatory hurdles after the U.S. President signaled possible antitrust concerns over what would be a very large market share for the combined company.
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What Is The Market Telling Us
Netflix’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 5.9% on the news that reports emerged that its potential acquisition of Warner Bros. Discovery faced scrutiny from U.S. officials, coupled with a significant stock sale by a company director. U.S. officials voiced fears that the deal could grant the streaming company excessive power over Hollywood, prompting discussions of a broad investigation into antitrust implications. Adding to investor anxiety, Netflix Director Reed Hastings executed a significant stock sale, liquidating 377,570 shares for approximately $40.7 million. Although some planned sales are anticipated, the timing of Hastings' move, coinciding with the regulatory threat, likely agitated investors and heightened market volatility.
Netflix is up 8.1% since the beginning of the year, but at $95.85 per share, it is still trading 28.4% below its 52-week high of $133.91 from June 2025. Investors who bought $1,000 worth of Netflix’s shares 5 years ago would now be looking at an investment worth $1,870.
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