Netflix has beaten Wall Street’s revenue and earnings estimates for its Christmas quarter, yet its shares dropped more than 4% in after-hours trading as the streaming giant remains embroiled in a high-stakes bidding war for Warner Bros Discovery.
The company reported results hours after amending its $82.7 billion merger agreement with Warner Bros, a move designed to counter a hostile bid from Paramount Skydance. “Historically, Netflix has not shied away from doing what’s right for long-term growth even at the expense of near-term negative share price reaction,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. “That seems to be the case again.”
Netflix posted revenue of $12.1 billion for October to December, slightly above analysts’ forecasts of $11.97 billion, according to LSEG data. Adjusted earnings per share came in at 56 cents, exceeding estimates of 55 cents per share. The growth was supported by membership gains, with the company surpassing 325 million paid subscribers, up from 300 million at the end of 2024.
Nielsen data indicated that Netflix’s monthly viewership rose 10% in December, boosted by the final season of hit series Stranger Things, which generated 15 billion viewing minutes. The platform also streamed two US National Football League games on Christmas Day and released a third installment of the Knives Out series.
For the full year, Netflix projected revenue between $50.7 billion and $51.7 billion for 2026, slightly below analysts’ estimates at the low end. The forecast factors in a doubling of advertising revenue year-over-year, expected to reach around $3 billion, according to Chief Financial Officer Spencer Neumann.
Co-CEOs Ted Sarandos and Greg Peters outlined plans to expand live events globally, including the upcoming World Baseball Classic in Japan, and to grow the company’s ad business with interactive and flexible ad formats. Netflix is also opening operation centers in the UK and Asia to support these initiatives.
The earnings report coincided with Netflix’s amended all-cash offer for Warner Bros, including the studio’s film and television library, major franchises such as Game of Thrones, Harry Potter, and DC Comics characters. “Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty,” Sarandos said.
Netflix secured a $59 billion bridge loan in December to fund the acquisition and increased the commitment by $8.2 billion to support its $27.75 per share offer. The company has paused share buybacks to preserve cash for the deal, which has already incurred $60 million in financing costs.
John Belton, portfolio manager at Gabelli Funds, said the Warner Bros acquisition could allow Netflix to grow its content library more efficiently, potentially reducing the need for aggressive investment in new content over time.
The quarter highlights Netflix’s ability to exceed expectations while balancing major strategic investments. Its stock movement underscores investor caution over the cost and scale of the Warner Bros acquisition, even as the company strengthens its position in the global streaming market.
