This year has been a rollercoaster for Netflix investors. The stock was considered a bastion of security and a defensive play amid the tariff war earlier in the year and outperformed its tech peers by a wide margin in the first four months. Then came the consolidation period and the stock traded flat for the next few months.
As economic and tariff concerns eased, investors turned to other tech names, abandoning Netflix. However, the worst was yet to come for the streaming giant, which slumped following its third-quarter 2025 results. Netflix saw some traction after the stock split (the old rule of stocks rising after the split announcement almost invariably holds), but soon found itself under selling pressure after the company announced it would acquire Warner Bros. (WBD) following the breakup of Discovery Global.
The deal, valued at an enterprise value of $82.7 billion, is the largest in Netflix history and, according to the company, would combine ‘the innovation, global reach and best-in-class streaming service of Netflix with Warner Bros.’ legacy of a century of world-class storytelling.” However, the deal won’t go through easily and Paramount (PSKY) has made a counteroffer of $30 per share in cash, which is higher than the $27.75 Netflix offered in the cash and stock transaction.
Even if Netflix manages to win the support of WBD shareholders, the deal will face regulatory scrutiny given the size of the transaction. Bob Iger, CEO of rival streamer Disney (DIS), expressed concern about the deal, citing the alleged pricing power it would give to Netflix.
Meanwhile, NFLX stock has moved south amid all the drama over the WBD acquisition and is now up about 6% for the year. Not to mention outperforming the S&P 500 Index ($SPX), the stock is now lagging its returns by a wide margin and is in bear market territory after falling nearly 30% from its 2025 highs.
Netflix’s proposed acquisition of WBD was not well received by sell-side analysts, and at least three have downgraded the stock. Here is a brief summary:
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Pivotal Research, which had a $160 price target on Netflix, downgraded the stock from a “Buy” to a “Hold,” calling the deal to buy WBD “expensive.” The brokerage, which had a high street price target for NFLX for much of this year, lowered its price target to $105.
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Huber Research twice downgraded Netflix shares from “overweight” to “underweight” while cutting its price target from $137.50 to $92, with analyst Craig Huber calling the deal “very risky.”
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Rosenblatt downgraded Netflix from “Buy” to “Neutral” and cut his price target from $152 to $105. Analyst Barton Crockett sees “a prolonged period of uncertainty and risk” for Netflix and assigned a “more cautious multiple” to NFLX stock.
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Bernstein and Wolfe lowered Netflix’s price target following the WBD deal, maintaining their respective ratings.
