Tag: Netflix

Netflix Faces Pivotal Earnings Report as $72 Billion Warner Bros. Bid Looms

Posted on by slightbourne@noblecapitalmarkets.com

Netflix is set to report fourth quarter earnings Tuesday afternoon amid one of the most consequential moments in the streaming giant’s history—a high-stakes bidding war for Warner Bros. Discovery that could fundamentally reshape the entertainment landscape.

Wall Street expects Netflix to post revenue of $11.96 billion for the quarter, up from $10.25 billion in the same period last year. Adjusted earnings per share are projected at $0.55, in line with company guidance. For the full fiscal year, analysts anticipate revenue of $45.1 billion alongside adjusted earnings of $2.52 per share. First quarter revenue is expected to reach $10.54 billion with adjusted earnings of $0.66 per share.

However, subscriber growth and content spending metrics may take a backseat to the elephant in the room: Netflix’s amended all-cash offer of $27.75 per share for Warner Bros. Discovery, valuing the deal at $72 billion in equity. The revised proposal comes as Netflix faces stiff competition from Paramount Skydance, which has offered $30 per share, or $108 billion, for the entire company including cable and news assets. Netflix’s bid specifically targets Warner Bros.’ film and streaming properties, excluding the Discovery Global assets.

The acquisition represents a dramatic strategic shift for Netflix, which has historically relied on organic growth and original content production rather than major acquisitions. Manhattan Venture Partners’ head of research Santosh Rao emphasized that as the industry leader, Netflix must maintain its competitive advantage, particularly as its growth rate shows signs of slowing.

The market has responded skeptically to the acquisition plans. Netflix shares have tumbled nearly 27% over the past six months, declining steadily since the company announced its Warner Bros. pursuit in late 2025. Investors appear concerned about the financial burden and integration challenges of such a massive acquisition, particularly as streaming competition intensifies and subscriber growth moderates.

While Netflix no longer discloses subscriber figures, Wall Street estimates total streaming memberships now exceed 325 million—representing approximately 8% year-over-year growth. That’s a significant slowdown from the 16% growth rate posted in the fourth quarter of 2023 and 13% growth between 2022 and 2023. The deceleration underscores why Netflix may be pursuing inorganic growth through acquisition rather than relying solely on its traditional playbook.

CFRA analyst Kenneth Leon has cautioned that the acquisition uncertainty could weigh on the stock for 18 to 24 months, with outcomes remaining unclear. He noted that Netflix would likely need to sell assets to manage the debt load from such a substantial transaction. The concern is valid—a $72 billion all-cash deal would substantially increase Netflix’s leverage and potentially constrain its ability to invest aggressively in content, the very fuel that powered its dominance.

Warner Bros. Discovery’s board has unanimously endorsed the Netflix offer, with leadership highlighting that the all-cash structure provides greater certainty for shareholders while allowing them to participate in the strategic value of the remaining Discovery Global assets. Netflix co-CEO Ted Sarandos has expressed strong confidence that the proposed combination would benefit all stakeholders, from investors to content creators.

Despite near-term headwinds, some analysts maintain a constructive long-term view. Rao acknowledged legitimate concerns about the immediate impact but argued that the acquisition would ultimately strengthen Netflix’s content library, production capabilities, and overall competitive position in an increasingly crowded streaming marketplace.

As Netflix reports earnings, investors will scrutinize not just the quarterly numbers, but management’s commentary on the acquisition rationale, financing plans, and vision for integrating one of Hollywood’s most storied studios into the streaming era’s dominant platform. The results could provide critical insights into whether Netflix can successfully execute this transformative deal while maintaining the operational excellence that made it an industry leader.

Netflix Plans 10-for-1 Stock Split, Aiming to Broaden Employee Ownership and Investor Access

Posted on by slightbourne@noblecapitalmarkets.com

Netflix is moving ahead with a 10-for-1 stock split, a decision aimed at making its shares more affordable for employees and smaller investors. The split, which will take effect on November 17, will reduce the price of each share to roughly one-tenth of its current value while increasing the total number of shares outstanding.

Shares of Netflix closed at $1,089 on Thursday. If the stock split were applied today, each share would trade around $110. The company said the move is designed to bring the price into a range that is more accessible for employees who participate in its stock option program—a strategy often used to encourage greater employee ownership and long-term alignment with company performance.

The announcement sparked a brief rally, with shares climbing as much as 3% before moderating after reports surfaced that Netflix may be exploring a potential bid for Warner Bros. Discovery. The stock still ended the session higher, reflecting renewed investor enthusiasm around the company’s confidence in its financial strength and long-term growth trajectory.

Although a stock split doesn’t alter a company’s overall market value, it can have important psychological and practical effects. By lowering the per-share price, a company makes its stock more approachable for retail investors and employees who might otherwise be deterred by a four-figure share price. Increased liquidity and trading volume often follow, which can narrow bid-ask spreads and potentially boost short-term demand.

Historically, stock splits have sometimes been associated with outperformance in the months after they are announced. Analysts attribute this to improved accessibility, stronger market sentiment, and a perception of management confidence. For Netflix, which has gained over 100,000% since its 2002 IPO, the move underscores how far the company has come—from a DVD-by-mail service to one of the world’s dominant entertainment platforms.

This marks Netflix’s third stock split since going public. The company last executed a 7-for-1 split in 2015, when shares traded above $700, and a 2-for-1 split in 2004. Both prior splits were followed by periods of sustained growth as Netflix expanded internationally and transitioned into original content production.

For employees, the latest split could make stock-based compensation more meaningful by lowering the strike price of future options. For retail investors, particularly those who invest through fractional-free brokerage platforms, the lower per-share price could make Netflix stock more psychologically appealing.

While large-cap firms like Netflix don’t face the same challenges as smaller companies, the move highlights a trend that could influence tech valuations more broadly. When industry leaders adjust pricing structures to make shares more attainable, it can encourage greater participation across the market—something smaller tech firms may also consider as they seek to attract investors and retain talent.

Netflix’s split will officially take effect mid-November, after which the stock will trade on a split-adjusted basis. For investors, the change offers no direct increase in value, but it may represent a renewed vote of confidence in the company’s long-term story—and a reminder that accessibility, perception, and participation all play key roles in market momentum.

Nasdaq Tumbles as Netflix Shock Eclipses Mideast Crisis

Posted on by slightbourne@noblecapitalmarkets.com

US stocks were mired in a broad sell-off on Friday, with the S&P 500 and Nasdaq Composite extending their losing streaks to six sessions despite easing concerns over a potential military escalation between Israel and Iran. The slide puts both indexes on pace for their worst weekly losses in months as investors continue repricing expectations around Federal Reserve rate policy.

The tech-heavy Nasdaq bore the brunt of the selling, dropping 1.3% as disappointing earnings from streaming giant Netflix exacerbated the rout in high-growth companies. The S&P 500 fell 0.4%, dragged lower by weakness in its information technology sector.

In contrast, the Dow Jones Industrial Average rose 0.7%, lifted by a massive post-earnings rally in American Express. But the divergent performance did little to soothe overall market jitters.

Netflix plummeted over 8% even after topping first-quarter profit and revenue estimates. The company’s decision to stop reporting paid subscriber metrics beginning in 2025 raised concerns on Wall Street about its ability to maintain its stratospheric growth trajectory.

The streaming industry bellwether’s slide reverberated across other pandemic winners. Chip stocks like Nvidia and data center firm Super Micro Computer tumbled 4% and 18% respectively, adding to this week’s brutal declines.

The technology-led selloff comes against a backdrop of unresolved global macro risks weighing on sentiment. Overnight, US equity futures careened lower and oil prices spiked after Israel launched airstrikes into Iran in retaliation for last week’s drone attacks.

However, markets appeared to take the muted response in stride as Friday’s session progressed. With neither side appearing eager to escalate the conflict further, crude benchmarks pared their earlier gains, while futures recovered most of their earlier losses.

Still, the flareup injected a fresh dose of geopolitical angst into markets already on edge over stubbornly high inflation and the implications for central bank policy tightening down the road. While no broader military conflagration has materialized yet, the smoldering tensions threaten to exacerbate existing supply chain constraints.

Ultimately, Wall Street’s immediate focus remains squarely on tackling decades-high consumer prices through aggressive monetary policy. And on that front, data continues to reinforce the challenges facing the Fed in bringing inflation back towards its 2% target.

This week’s string of hotter-than-expected readings, ranging from producer prices to housing costs, dimmed hopes for an imminent rate cut cycle central banks had been forecasting just months ago. Economists now don’t see the first Fed rate reduction until September at the earliest.

That policy repricing has piled pressure onto richly-valued growth and technology names which had rallied furiously to start the year. Year-to-date, the Nasdaq has now surrendered nearly all of its 2023 gains.

With the S&P 500 over 5% off its highs, earnings season takes on heightened importance for investors seeking reassurance that corporate profits can withstand further Fed tightening. So far, results have failed to provide much of a safety net with the majority of major companies reporting missing lowered expectations.

The deepening tech wreck underscores the dimming outlook for an already battered leadership group. Absent a decisive downtrend in inflation, markets could have more room to reset before finding their ultimate nadir.