Netflix Stock Plunges 33% as Merger Uncertainty Clouds Upcoming Earnings

2026-01-14 companies

Los Gatos, Tuesday, 13 January 2026.
Trading 33% below highs, Netflix faces critical earnings scrutiny on January 20, as uncertainty surrounding its Warner Bros. Discovery bid overshadows strong underlying revenue projections.

Market Valuation and Merger Volatility

Netflix (NFLX) shares have faced significant downward pressure, currently trading approximately 33% below their 52-week high of $134.12 [1]. As of the market close on January 13, 2026, the stock settled at $90.69, reflecting a volatile period for the streaming giant following its 10-for-1 stock split executed on November 17, 2025 [4][6]. Since the split, the stock has declined by 19% as of January 9, erasing billions in market capitalization amidst broader sector uncertainty [4][8]. A primary driver of this volatility is the company’s aggressive pursuit of Warner Bros. Discovery (WBD); reports from January 12 indicate Netflix is considering a revised all-cash takeover offer valued at $83 billion [6]. This potential acquisition has rattled investors concerned about execution risks, regulatory scrutiny, and the complexities of integrating such a massive media portfolio [1][8].

Legal Battles and Analyst Sentiment

The bidding war for Warner Bros. Discovery has intensified, with Paramount filing a lawsuit to compel WBD to disclose details regarding its decision to favor a Netflix acquisition [6]. This legal maneuvering, combined with what analysts describe as an “M&A overhang,” has contributed to a cautious outlook on Wall Street [8]. While the consensus recommendation among brokerage firms remains an “Outperform,” analysts have begun recalibrating their expectations [5]. On January 12, TD Cowen maintained its “Buy” rating but slashed its price target from $142.00 to $115.00, representing a reduction of roughly 19.014 percent [5]. Similarly, CFRA downgraded the stock to “Hold” earlier in the month with a target of $100.00 [5]. Despite these adjustments, the average one-year price target sits at $126.83, suggesting a potential upside of 39.85 percent from the January 13 closing price [5][6].

Q4 Earnings Outlook: Fundamentals vs. Sentiment

Looking beyond the merger drama, Netflix is scheduled to report its fourth-quarter earnings on Tuesday, January 20, 2026 [1]. The company’s fundamental performance remains robust, with projections estimating Q4 revenue at approximately $11.96 billion, marking a 16.7% year-over-year increase [1]. Earnings per share (EPS) are expected to reach $0.55, a significant jump of 27.9% compared to the prior year [1]. These figures are supported by the company’s growing advertising tier and expansion into live programming, which are viewed as key drivers for future engagement [1][2]. However, the options market is pricing in substantial volatility post-earnings, signaling a potential move of roughly 7.3% in either direction for contracts expiring later that week [1]. While the forward price-to-earnings ratio has softened to 28—nearing three-year lows—investors remain hyper-focused on whether the company’s operational success can outweigh the capital-intensive risks of its expansion strategy [4].

Sources

Stock valuation Streaming media