Netflix Hopes to Change the Narrative With Earnings as Warner Bros. Deal Overhangs the Stock

It’s been more than a month since Netflix, run by co-CEOs Ted Sarandos and Greg Peters, agreed to buyWarner Bros. Discovery’s studios and streaming businesses in a megadeal valued at $82.7 billion. Since then, investors have not been able to chill.

After all, David Ellison and his Paramount has continued to fight for WBD by reiterating and strengthening its hostile bid. Paramounteven suedWBD on Jan. 12, escalating the showdown, trying to get it to give Paramount’s offer another look, while also threatening to launch a proxy fight for the company.

At the same time, Netflix’s long-running focus on its streaming business would come to an end if the company manages to close the Warner deal, raising question marks about how it will run WBD’s HBO Max and studio operation, and causing investor concerns that this would confuse what has so far been a more focused stock and growth story.

No surprise that Netflix’s stock has taken a hit. After closing the last trading day before the Warner deal announcement at $103.22, it closed Thursday at $88.05, down 15 percent.

After the market closes on Tuesday, Netflix will report its fourth-quarter and full-year 2025 results, share its outlook on 2026, and hold a conference with management for analysts. The question is: will investors focus on financial and operating trends, including such recent content slate hits as the final season of Stranger Things and Emily in Paris season 5, or just focus on any deal commentary, or lack thereof?

Wall Street experts mostly expect strong results for the latest quarter, but whether that will provide any temporary relief for the stock is unclear. So, let’s look at what analysts expect from Netflix’s latest earnings report.

Wedbush Securities analyst Alicia Reese on Thursday reiterated her “outperform” rating on Netflix’s stock, but cut her price target by $25 to $115, citing the “M&A overhang.”

“Shares have been in decline since Netflix reported underwhelming third-quarter results and fourth-quarter guidance, after several quarters of phenomenal results, amid the overhang from the contentious pending WB acquisition,” Reese argued. But the expert expects positive operating trends from the latest earnings update. “Results and guidance should underscore steady subscriber growth coupled with rising average revenue per member, driven by price increases and a growing ads business,” she highlighted.

“With much still to prove, we think Netflix is positioning for substantial growth in global advertising, and that should not be overlooked,” Reese concluded. “We expect ad revenue to become Netflix’s primary revenue driver in 2026, with significant opportunities in 2027. With increasing content spend across movies, serial content, games, live events, and podcasts, Netflix must demonstrate soon that its ad program can accelerate growth to justify the higher spend.”

BMO Capital Markets analyst Brian Pitz, who reiterated his “outperform” rating with a $143 stock price target in his earnings preview, also highlighted the recent challenges for the streamer’s stock. “Shares have struggled amid fears of a decelerating growth story for 2026, combined with WBD’s large-scale M&A, raising concerns about integration complexities and execution risk,” he wrote. “However, our checks suggest a solid quarter of engagement, supported by Stranger Things, a record-setting Christmas Day NFL game, and the Jake Paul boxing match.”

His financial forecasts remained unchanged, including fourth-quarter and full-year 2025 revenue growth of 16 percent, “decelerating to around 13.5 percent” in 2026.

About the Warner deal showdown, Pitz offered: “While WBD has entered into an $83 billion agreement to be acquired by Netflix, the process remains somewhat fluid as Paramount remains highly active in attempting to acquire WBD. We suspect that Paramount will ultimately increase its bid from $30 per share (cash), which could force Netflix to raise its bid or risk losing the asset. Netflix would receive a $2.8 billion break-up fee if WBD walks away from the deal, representing 16 percent of Netflix’s estimated 2025 cash content spend. Ultimately, we question how much higher Netflix would be willing to go from their current bid of $27.75 ($23.25 in cash, $4.501 in stock), though reports suggest they are weighing shifting to an all-cash bid.”

The analyst remains bullish on the stock, concluding: “Netflix remains one of the best-positioned vendors amid a massive shift in ad spending from linear to connected TV, which is still in the early-to-mid innings.”

Meanwhile, Bernstein analyst Laurent Yoon has an “outperform” rating with a $125 price target on Netflix’s stock and recently predicted “a solid fourth quarter, closing out 2025 with 16 percent [revenue] growth and more than 35 percent earnings per share growth.”

Looking ahead, Yoon argued that “continued international expansion, advertising growth, and pricing levers should support a constructive 2026 outlook, with operating leverage driving further margin
expansion toward the mid-30 percent range.”

Actually, “it’s about 2026 pricing,” he highlighted in the headline of his preview report. “There is a great deal riding on Netflix’s upcoming earnings call. It offers an opportunity – at least temporarily –to address concerns around engagement by demonstrating how a strong content slate directly translates into engagement and all that follows it,” he wrote. “That said, it’s already old news, and themore important issue investors will be focused on is 2026 [revenue] growth.”

Addressing the deal noise, Yoon focused on fundamentals, writing: “While the ongoing pursuit of WB may weigh on near-term sentiment, the longer-term outlook – with or without WBD – remains intact.”

TD Cowen analyst John Blackledge has stuck to his “buy” rating on Netflix shares, but recently slashed his price target by $27 to $115.

“We expect paid net adds of 14.2 million [in the fourth quarter], reflecting seasonal strength and strong slate of originals, including Stranger Things season 5 and Christmas NFL games,” he wrote in his forecast. “Our annual ad buyer survey implies Netflix is seeing incremental advertiser adoption, while our consumer survey suggests Netflix remains the number 1 choice for living room viewing in the fourth quarter.”

The analyst also projected that Netflix would end 2025 with around 63 million global AVOD paid members, “rising to around 104 percent by ’30.”

Overall, Blackledge suggested that “investors will largely focus on first quarter/full-year 2026 guidance” in the latest set of results, but acknowledged: “Investors will likely also look for any additional color around integration plans for Warner Bros.”

Benchmark analyst Daniel Kurnos, who has a “hold” rating without a price target, shared this expectation in the headline for his earnings preview: “A Modest Break from the M&A Saga with ’26 Guidance on Tap.” But it is a bit more complicated than that.

The results “could conceivably offer a brief respite from the relentless focus on the current M&A love triangle that seems to have no near-term end in sight and is bound to get messier before it gets better, as Netflix will likely be able to offer solid 2026 revenue and operating income guidance,” the expert offered, before swerving. “Okay, who are we kidding, there is no chance that this print distracts investors from the ongoing circus, but it could be a reminder of the soundness of Netflix’s fundamentals and the organic levers the company has going into what should be a banner year for connected television (although Netflix could face some engagement headwinds from the Olympics and the World Cup), aided by reaccelerating international growth.”

Finally, Morgan Stanley analyst Benjamin Swinburne, late in 2025, stuck to his “overweight” rating but lowered his stock price target by $30 to $120 due to the deal risks.

“We see significant opportunity from combining Warner Bros.’ 100-year-old film and TV library, production scale and talent relationships, with HBO’s position as the home of prestige TV and global brand equity with consumers, with Netflix as the only streaming service to have truly achieved global, profitable scale,” he wrote. “However, while we lean bullish on the acquisition, we acknowledge Netflix is paying a premium multiple for the assets. In addition, the transaction brings increased management
distraction risk as it navigates the approval process and integrates the businesses. Finally, WB brings
an increase in complexity and earnings volatility to Netflix relative to the standalone business.”