Netflix shares fell sharply in early European trading on Wednesday, dropping 7% by mid-morning despite the streaming giant reporting fourth-quarter results that exceeded Wall Street expectations, as investors grew increasingly concerned about the company’s costly pursuit of Warner Bros Discovery.
The stock decline marks a continuation of a troubling trend for the Los Gatos, California-based company. Netflix shares have now shed approximately 20% of their value since the company first entered the bidding war for Warner Bros Discovery in early December, wiping out billions in market capitalization even as the company demonstrates solid operational performance.
The market’s negative reaction came despite Netflix beating analyst forecasts for both revenue and earnings in the crucial holiday quarter, typically a strong period for subscriber growth. The disconnect between strong financial results and plummeting share price underscores growing investor anxiety about the strategic direction and financial prudence of Netflix’s aggressive acquisition strategy.
Adding to market concerns, Netflix announced it would suspend its share buyback program—a move that had previously signaled management confidence and returned cash to shareholders. The company told investors the pause is necessary to accumulate cash reserves to help finance the potential Warner Bros. acquisition, suggesting the deal could require substantial capital deployment.
Netflix shares had already closed down 0.8% in Tuesday’s regular U.S. trading session before the European markets opened Wednesday morning. The Frankfurt-listed shares were trading 7% lower by 0714 GMT, reflecting deepening skepticism among international investors about the wisdom of pursuing what appears to be an increasingly expensive acquisition.
The sustained sell-off suggests that investors remain unconvinced that acquiring Warner Bros. Discovery—which would bring HBO, CNN, and major film studios under Netflix’s umbrella—justifies the financial strain and strategic risks involved, particularly as the streaming wars intensify and multiple competitors vie for market share.
WHAT YOU SHOULD KNOW
Netflix’s stock is down 20% since early December despite strong Q4 earnings, revealing a critical investor concern: the market believes the company’s aggressive bid for Warner Bros Discovery is too expensive and risky.
By pausing share buybacks to stockpile cash for the acquisition, Netflix is signaling the deal will require massive capital — a move that’s erasing shareholder value faster than solid financial performance can rebuild it. Wall Street’s message is clear: good quarterly numbers don’t justify what investors see as a potentially overpriced gamble.
