Netflix Slightly Exceeds Expectations During 4Q

Netflix slightly exceeded Wall Street's revenue expectations for its holiday quarter (Q4 2025), reporting $12.1 billion in revenue—modestly above analyst forecasts of around $11.97 billion—while surpassing 325 million paid subscribers worldwide. The company also posted adjusted earnings per share of $0.56, edging out estimates of $0.55.

Despite the positive results, Netflix shares declined in after-hours trading, falling around 4%, as investor attention remained fixed on the company's ongoing pursuit of Warner Bros. Discovery assets amid a heated bidding war.

Netflix has amended its offer to an all-cash proposal valued at approximately $82.7 billion (or $27.75 per Warner Bros. Discovery share) for the studio, streaming assets, and content library—including major franchises like Harry Potter, Game of Thrones, and DC Comics. The move counters a competing hostile all-cash bid from Paramount Skydance, which seeks the full Warner Bros. Discovery entity, including its cable networks.

The acquisition pursuit has weighed heavily on Netflix's stock, which has dropped roughly 30% in recent months amid concerns over deal costs, potential debt, regulatory hurdles, and execution risks—overshadowing the solid underlying performance.

For full-year 2025, Netflix achieved revenue growth of about 16%, with advertising revenue exceeding $1.5 billion. Looking to 2026, the company guided for revenue between $50.7 billion and $51.7 billion (with ad revenue expected to roughly double) and continued subscriber and profitability expansion, though some projections fell slightly short of analyst expectations at the lower end.

The earnings release highlighted strengths in content performance—boosted by hits like the final season of Stranger Things and live events such as NFL games—but market reaction underscored broader uncertainty tied to the high-stakes Warner Bros. bidding contest rather than the quarterly beat itself.

Netflix had a eventful Tuesday, switching its roughly $83 billion offer for Warner Bros. Discovery's studio and streaming assets (including HBO Max) to an all-cash deal at $27.75 per share—keeping the total value unchanged but simplifying the structure and providing more certainty for WBD shareholders.

This came ahead of Netflix's Q4 earnings release, which narrowly beat expectations but failed to lift the stock; shares dropped over 4% in after-hours trading amid broader market declines tied to tariff concerns and ongoing deal uncertainty. The stock has faced pressure in recent months partly due to the acquisition overhang.

In the earnings call, co-CEOs Ted Sarandos and Greg Peters reiterated strong confidence in securing regulatory approval for the Warner deal and committed to maintaining the 45-day theatrical window for Warner Bros. films—a key reassurance for exhibitors.

They avoided mentioning Paramount, which recently sued Warner Bros. Discovery over disclosure issues and threatened a proxy fight to push its rival all-cash bid (valued higher at $30/share for the full company). Netflix's shift to pure cash strengthens its position, pressuring Paramount's argument by making Discovery Global's value (post-separation) less central to the math and cornering Paramount into needing even more aggressive terms to compete.