Netflix Beats Revenue Estimates but Shares Fall as Warner Bros Bidding War Intensifies

Key Highlights

• Netflix reported $12.1 billion in quarterly revenue, above estimates
• Adjusted earnings reached 56 cents per share
• Shares fell more than 4% after hours
• Netflix pushed forward with an $82.7 billion all-cash bid for Warner Bros
• Subscriber base topped 325 million worldwide

Introduction

Netflix delivered solid financial results for its holiday quarter. Revenue and earnings both topped Wall Street expectations.

However, investors looked past the numbers. Instead, they focused on Netflix’s escalating battle to acquire Warner Bros Discovery. As a result, Netflix shares slid more than 4% in after-hours trading.

Netflix Posts Modest Beat on Revenue and Earnings

Netflix reported $12.1 billion in revenue for the October-to-December quarter. Analysts had expected $11.97 billion.

Adjusted earnings reached 56 cents per share, slightly above forecasts. Membership growth helped drive the results. Netflix ended the quarter with more than 325 million paid subscribers, up sharply from late 2024.

Hit Content and Live Sports Lift Viewership

Strong programming supported the quarter. According to Nielsen, Netflix viewership jumped 10% in December.

The final season of Stranger Things led the surge. The show generated 15 billion viewing minutes. In addition, Netflix streamed two NFL games on Christmas Day. It also released a new Knives Out film.

Together, these releases boosted engagement during a critical period.

Warner Bros Deal Overshadows Earnings

Despite the strong quarter, the Warner Bros bid dominated investor attention. Netflix updated its merger agreement just hours before releasing earnings.

The company now offers $27.75 per share in cash, valuing the deal at $82.7 billion. Netflix aims to block a rival bid from Paramount Skydance.

According to Ted Sarandos, the all-cash structure speeds up the vote and adds certainty. Still, the scale of the deal raised concerns.

Guidance and Buyback Pause Add Pressure

Netflix forecast $50.7 billion to $51.7 billion in revenue for 2026. The low end missed analyst expectations.

At the same time, the company paused share buybacks. Management wants to preserve cash for the Warner acquisition. Netflix already spent $60 million on financing costs.

Although margins expanded in recent years, investors now expect higher spending.

Advertising and Live Events Drive Growth Strategy

Netflix continues to diversify revenue. Advertising should double this year to about $3 billion, according to CFO Spencer Neumann.

Meanwhile, live events remain a priority. The company plans to expand sports and entertainment outside the U.S. It will stream events like the World Baseball Classic in Japan.

Co-CEO Greg Peters said Netflix is also opening new operations hubs in the UK and Asia. These centers will support live programming and ad growth.

Why Investors Remain Cautious

Investors respect Netflix’s long-term vision. However, large acquisitions carry risk. The Warner deal would add major franchises like Game of Thrones, Harry Potter, and DC Comics.

Still, the price tag and financing needs weigh on sentiment. For now, markets prefer clarity over ambition.

Conclusion

Netflix delivered a solid quarter. Revenue rose, subscribers grew, and content performed well.

However, the Warner Bros bidding war now defines the story. Until investors gain confidence in deal execution and returns, Netflix shares may remain under pressure