Netflix has experienced a significant share price decline despite announcing impressive financial results, coming just hours after the streaming giant simplified its takeover bid for Warner Bros Discovery. The market reaction highlights investor nerves surrounding the high-stakes acquisition battle.
Strong Financial Performance Overshadowed
The world's leading streaming service reported paid households had reached a record 325 million during the final quarter of 2025, representing substantial growth from 300 million a year earlier. Fourth quarter revenues reached $12.1 billion, surpassing analyst expectations during the crucial Christmas period.
Investor Concerns Surface
Despite these positive figures, Netflix shares dropped 5% in after-hours trading following a flat performance during the main session. Financial analysts attribute this decline to the company's forward-looking guidance on revenue and profits missing market expectations, compounded by ongoing uncertainty surrounding the Warner Bros acquisition.
Simplified Takeover Terms
Earlier on Tuesday, Netflix announced it had revised its $72 billion offer for Warner Bros Discovery's studios, back catalogue, and HBO Max streaming division. The modified proposal now consists entirely of cash, removing the previous element that included Netflix shares.
The total deal value remains unchanged at $82.7 billion. The original cash-and-shares structure had been viewed as potentially complicating matters, particularly given that share-based offers provide no guaranteed future value compared to rival all-cash bids.
Streamlining the Acquisition Process
In a joint statement, Warner Bros Discovery and Netflix stated the revised offer "simplifies" the purchase process, "provides greater certainty of value" for WBD stockholders, and establishes an "expedited timeline" for shareholder voting on Netflix's proposal.
During an analyst video conference, Netflix co-chief executive Ted Sarandos expressed confidence in securing all necessary global regulatory approvals, despite concerns about potential streaming market dominance issues.
Competitive Bidding Landscape
The streaming giant faces competition from Paramount Skydance, which has presented a rival $108.4 billion all-cash bid to acquire the entirety of Warner Bros Discovery. This alternative offer has been formally rejected by WBD's board.
Paramount maintains its bid offers superior value, while Warner Bros Discovery has identified "deficiencies" in the competing proposal. Paramount's tender offer, which allows WBD shareholders to express support, is scheduled to expire but is expected to be extended.
Proxy Battle Looms
The most significant indication of Paramount's strategy emerged with confirmation of plans for a proxy fight campaign. This approach seeks to replace the current Warner Bros board with directors who would support Paramount's acquisition bid, potentially complicating Netflix's acquisition timeline.
The Netflix proposal could be presented for shareholder voting as early as April, setting the stage for continued corporate drama in the streaming industry's most significant potential consolidation.
