What Happened?
Shares of streaming video giant Netflix (NASDAQ: NFLX) jumped 10.4% in the afternoon session after the company walked away from a high-stakes bidding war for Warner Bros. Discovery, a move investors viewed as a sign of financial discipline.
The streaming service showed restraint and did not raise its offer in response to a higher bid from rival Paramount. According to a joint statement from co-CEOs Ted Sarandos and Greg Peters, the price required to match the competing offer made the deal financially unattractive. Investors reacted with relief, interpreting the decision as a responsible financial strategy and a focus on long-term profitability rather than a missed opportunity. This positive sentiment reflected the view that Netflix had avoided overextending itself on a massive buyout.
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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. Moves this big are rare for Netflix and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 9.7% on the news that the company reported third-quarter results overshadowed by a large, unexpected tax expense in Brazil, leading to an earnings miss. While revenue grew 17.2% year-over-year to $11.51 billion, meeting forecasts, its earnings per share of $5.87 fell short of analyst estimates. The shortfall stemmed from a one-time tax charge of about $619 million related to an ongoing dispute in Brazil. This unexpected expense was not included in the company's prior forecast and dragged its operating margin down to 28.2%. Although the company stated the tax issue would not materially impact future results, the significant headline profit miss concerned investors. However, looking ahead, guidance was in line with Wall Street forecasts. Despite the initial negative market reaction, some analysts maintained a bullish outlook, with Bank of America reiterating a Buy rating while noting that the stock will be fueled by "continued positive subscriber and earnings momentum in addition to evolving advertising and live opportunities.".
Netflix is up 4.3% since the beginning of the year, but at $94.88 per share, it is still trading 29.2% 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 $1,723.
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