Netflix’s (NFLX) fourth-quarter earnings report on Tuesday is likely to get overshadowed by the Warner Bros. Discovery (WBD) deal, amid the streaming giant’s heated battle with Paramount to take control of one of the iconic studios in Hollywood.
Netflix, in December, first announced plans to acquire Warner Bros. Discovery (WBD) for an enterprise value of about $82.7 billion. Since then, the company has faced opposition from rival bidder Paramount Skydance (PSKY), who has repeatedly argued that its all-cash bid for Warner Bros. is superior to Netflix’s cash-and-stock deal.
Netflix, which is reportedly expected to change to an all-cash bid for Warner Bros., has lost 12% since it announced its plan to acquire Warner Bros. Overall, the stock has gained nearly 6% last year, compared to the near 17% rise in the broader S&P 500 Index.
Seeking Alpha analyst Dilantha De Silva noted that even though the company is well-positioned for long-term growth, offering an all-cash deal for Warner Bros. will be a drag on Netflix’s projected 2026 earnings per share.
Coming to earnings, analysts believe steady subscriber growth, along with accelerated ad revenue is expected to positively impact Netflix’s results and to lift the stock higher, especially after a weak third quarter report.
Wall Street expects California-based Netflix to post a nearly 17% rise in revenue during the fourth-quarter, thanks to a slew of content including the final season of the popular sci-fi series Stranger Things, the Christmas NFL games as well as the third instalment of the “Knives Out” movie featuring Daniel Craig.
Netflix is expected to post fourth-quarter EPS of $0.55 on revenue of $11.97 billion.
“With much still to prove, we think Netflix is positioning for substantial growth in global advertising, and that should not be overlooked,” said Wedbush analyst Alicia Reese, adding that the firm expects ad revenue to “become Netflix’s primary revenue driver in 2026, with significant opportunities in 2027.”
Seeking Alpha analysts and Seeking Alpha’s Quant ratings consider the stock a Hold, while Wall Street analysts are bullish and rated it a Buy.
Over the last three months, EPS estimates have seen 18 upward revisions, compared to nine downward revisions, while revenue estimates have been revised upwards 25 times versus six downward moves.