Netflix Warner Deal worries overshadow an earnings beat as investors push shares lower despite higher revenue and growing subscribers

Netflix Inc., the US streaming giant, reported stronger-than-expected revenue for the October to December quarter in Los Angeles on Tuesday, but investor unease over its aggressive pursuit of Warner Bros.

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Discovery sent the company’s shares down about 4 per cent in after-hours trading.

The company posted revenue of $12.1bn for the holiday quarter, slightly above Wall Street expectations of $11.97bn, according to analysts surveyed by LSEG.

Netflix also said its global subscriber base had surpassed 325 million, underlining continued expansion across international markets.

Despite the upbeat figures, sentiment weakened after Netflix issued a cautious revenue outlook for 2026.

The company forecast full-year revenue of between $50.7bn and $51.7bn, with the lower end falling just below analysts’ consensus estimate of $50.98bn.

Investor attention remained firmly fixed on the Netflix Warner Deal, a proposed $82.7bn acquisition of Warner Bros.

Discovery that would rank among the largest media mergers in history.

Analysts said concerns over the scale, financing and strategic risks of the bid outweighed the quarterly performance.

Viewership growth during the quarter was driven by major content releases.

Netflix said viewing minutes rose 10 per cent in December, helped by the final season of Stranger Things, which generated about 15 billion viewing minutes, according to Nielsen.

The company also broadened its appeal by streaming two NFL games on Christmas Day and releasing the third instalment of the Knives Out film franchise.

The streamer confirmed it had crossed 300 million subscribers by the end of 2024, reinforcing its dominant position in the global streaming market amid intensifying competition.

Ross Benes, an analyst at eMarketer, said investors appeared sceptical that the Warner Bros. Discovery acquisition would deliver sufficient long-term value.

Ross Benes said merger and acquisition activity was likely to overshadow Netflix’s quarterly results in the coming months, even though the company’s balance sheet remained stronger than many peers.

Netflix recently revised its offer for Warner Bros.

Discovery into an all-cash deal covering its studios, content library and major franchises, including Game of Thrones, Harry Potter and DC Comics characters such as Batman and Superman.

Co-chief executive Ted Sarandos said the revised structure would speed up the approval process and provide greater financial certainty.

To finance the deal, Netflix said it secured commitments for a $59bn bridge loan in December and later increased the amount by $8.2bn to support its $27.75 per share offer.

The company added that it would pause share buybacks to conserve cash and had already incurred $60m in financing-related costs.

For the quarter, Netflix reported adjusted earnings of 56 cents per share, marginally ahead of expectations.

The company also said advertising revenue was expected to roughly double as it continues to expand its lower-priced, ad-supported plans.

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While Netflix maintained a confident tone about long-term growth, the market reaction highlighted how the Netflix Warner Deal has become a defining test of the company’s strategy, with investors weighing the promise of expanded content against the risks of an ambitious acquisition.