Netflix Q4 Earnings: Market Focuses on $82.7 Billion Warner Bros Acquisition Strategy

2026-01-20 companies

Los Gatos, Tuesday, 20 January 2026.
Despite projected 17% revenue growth in today’s report, investor attention is dominated by Netflix’s risky $82.7 billion bid for Warner Bros, with options markets pricing in significant volatility.

Earnings Volatility and Market Expectations

As markets prepare to close today, Tuesday, January 20, 2026, volatility is the watchword for Netflix investors [1][7]. Options markets are currently pricing in a significant swing in the stock price following the release, with traders anticipating a move of approximately 7% to 7.78% in either direction [1][2]. This heightened anxiety reflects recent bearish sentiment; shares of the streaming giant have retreated nearly 30% since the previous quarterly report in October 2025 [1]. Furthermore, the stock has struggled in the new year, declining 6% within the first 11 trading days of 2026 [3]. Currently trading around $90 a share—a figure that reflects the 10-1 forward stock split implemented in November 2025—the company faces high expectations to justify its valuation [3][8].

Financial Metrics: Revenue and Subscriber Growth

Despite the recent stock performance, the fundamental metrics expected in today’s report remain robust. Wall Street consensus estimates project fourth-quarter revenue to reach $11.97 billion, representing a year-over-year increase of approximately 17% [1][2][8]. Earnings per share (EPS) are anticipated to climb to $0.55, marking a gain of roughly 28% to 30% compared to the same period last year [1][2]. A critical component of this growth narrative is the company’s advertising tier, which has successfully amassed over 94 million subscribers [8]. Analysts at Goldman Sachs expect the report to demonstrate a strong close to 2025, driven by improvements in user engagement, gaming, and the burgeoning ad business [1].

The $82.7 Billion Warner Bros. Discovery Equation

While the quarterly figures are vital, the dominant narrative surrounding Netflix is its aggressive strategic pivot toward consolidation. In December 2025, the company announced a monumental agreement to acquire Warner Bros. Discovery’s studio and streaming assets—including HBO and Max—in a deal valued at $82.7 billion [3][8]. This move has positioned Netflix as the frontrunner for the assets, though the acquisition is contingent upon Warner Bros. spinning off its television networks division by mid-to-late 2026 [3]. The proposal has not gone unchallenged; Paramount has submitted a rival bid of $108 billion [8]. However, market observers have characterized the Paramount offer as “illusory” due to its heavy reliance on $87 billion in debt [3]. Consequently, the gap between the two bids stands at 25.3 billion, a disparity that highlights the complex valuation war currently unfolding.

Regulatory Headwinds and Future Outlook

The path to closing the Warner Bros. deal is fraught with hurdles, including pushback from politicians and intense scrutiny from regulators concerned about pricing power and market competition [1][8]. Beyond the merger drama, investors are looking for clarity on Netflix’s organic growth trajectory. Analysts forecast that revenue growth may decelerate from the 16-17% range seen in 2025 to approximately 13.5% in 2026 [2]. Reflecting this caution, KeyBanc analyst Justin Patterson recently lowered his price target for the stock to $110 [2]. As management takes the stage for the earnings call, the market’s reaction will likely hinge on commentary regarding the financing strategy for the Warner Bros. acquisition and the company’s ability to maintain margins amidst these massive expansion efforts [4].

Sources

Earnings Netflix