After the bidding war over Warner Bros. Discovery ended with streaming giant Netflix bowing out of the race, leaving the field to David Ellison’s Paramount late on Thursday, the David Zaslav-led Hollywood studio is expected to soon make the $111 billion megadeal from Team Ellison official.
Wall Street analysts have started chiming in on what the decision means for Netflix, especially since it pulled the plug on its pursuit of WBD very quickly, well ahead of a final Wednesday deadline to improve its own offer, and on a day that saw co-CEO Ted Sarandos travel to Washington, DC.
Why did Netflix fold on the high-stakes game of Hollywood poker, and what does it mean for its strategic focus and potential future spending? In a sign that the company has taken back at least some control over its stock narrative, many on Wall Street rejoiced that Netflix can now return to focus on its pure-play streaming strategy.
A key data point underlining excitement about that: the streamer’s stock jumped 7.9 percent in Friday pre-market trading to $91.31 as of 8 a.m ET. Netflix’s stock had closed at $103.22 on Dec. 4, the day before the initial WBD-Netflix deal announcement.
However, investors’ concerns over the outlook for user engagement and questions about where Netflix could look to invest next are likely to persist.
Here is an early look at the Wall Street analyst reaction and takeaways so far.
Analyst: Laurent Yoon, Bernstein
Stock rating and price target: outperform, $115
Key takeaways: “Netflix walks and everyone wins,” was Yoon’s verdict in the headline of his Friday report. “Within hours of WBD notifying Netflix that it was formally recognizing Paramount’s offer as superior, Netflix walked. Perhaps that meeting in DC didn’t go too well, and they were prepared to react quickly. Netflix remain disciplined allocators of capital — a defining feature of their success. We believe Netflix’s decision to walk creates a win-win-win outcome.” He reiterated his “outperform” rating for Netflix, citing “its near-term upside and longer-term growth driven by its fundamentals.”
Yoon anticipates the streamer’s shares “to recover to an above-market multiple in the near-term, implying more than $90 per share,” Yoon’s report also highlighted. “The deal overhang disappears – at least for now – and management can refocus on what drives their business.”
That said, Netflix is “not off the hook,” the analyst emphasized, pointing to investors’ likely refocusing on fundamentals. “Engagement concerns will persist as platforms like YouTube take an increasing share of viewing time. But as the fourth quarter 2025 reminded us, better content drives more engagement, and Netflix is once again ramping its content spend to address the issue. We also see further upside once they raise prices – it’s time and [the company is] no longer constrained by regulatory optics – and lift their margin guide, which would translate directly into incremental earnings per share and a higher valuation multiple.”
Yoon also touched on a “lingering question,” namely, potential other deals, or “what other options Netflix could consider with a more than $70 billion envelope to secure the long-term sustainability of their content production and distribution engine.” His take: “It implies ambitions well beyond incremental content budget and buybacks.”
Analyst: John Blackledge, TD Cowen
Stock rating and price target: buy, $112
Key takeaways: Blackledge said he was “surprised at how quickly Netflix walked away (we expected them to match the latest Paramount offer),” but emphasized that management’s comment that WBD was “nice to have” but not a “must have at any price” is “a sentiment we share.” He added that “Netflix also won’t have to manage a likely complex integration of a massive theatrical business.”
The analyst’s conclusion: “Net-net, we view Netflix as well positioned to continue to drive viewership share gains both in the U.S. and globally amid the transition to on-demand, streaming TV.”
Blackledge’s colleague and entertainment industry analyst Doug Creutz highlighted how quickly the streaming giant bowed out of the race for WBD. “Netflix’s response to the Warner board’s announcement took very little time – less than two hours – which suggests to us that either the decline in Netflix shares since they made their offer had already caused Netflix management to reassess their ardor for the deal, or the process was always mostly about trying to get Paramount Skydance to pay as much money as possible to get Warner, and Netflix management was not inclined to press their luck any further.”
Analyst: Rob Fishman, MoffettNathanson
Stock rating and price target: buy, $115
Key takeaways: After the news that “Netflix declined to raise its offer for Warner Bros. and continue the bidding war, the ‘must-have’ deal for Paramount is set to overcome the ‘nice to have’ opportunistic deal for Netflix,” the MoffettNathanson expert wrote in his report.
“In a surprise to us, Netflix declined to even take its four-day matching period to evaluate whether to increase its bid and instead decided to bow out altogether,” he highlighted. “By moving on so quickly and avoiding further uncertainty for the company – reflected in the recent stock price – Netflix is signaling confidence in the underlying strength of its core business and the fact that this opportunity was much more offensive than defensive in nature. … We do think Netflix would have been able to monetize the existing Warner IP far better than WBD today given the relative scale advantages of its distribution platform (especially internationally) and proven success of creating buzz around and extending the reach of library content (think Suits, but on steroids). This deal could have accelerated Netflix’s growth on top of a strong existing trajectory by attracting new subscribers, reducing churn, and driving more engagement.”
However, Netflix’s stock was driven down around 30 percent since its WBD deal announcement in early December. “The defensive argument led to the overhang for Netflix shares,” Fishman explained. “Questions grew as to whether Netflix was turning to Warner Bros. because its core growth story was over and it had to acquire these assets to reignite the business.” With a mega-deal now off the table, “Netflix can think of other ways to allocate this capital to premium content, including top-tier sports rights (read: NFL) and other licensing deals like its recent Sony Pay 1 movie deal,” the analyst concluded. “While engagement growth has slowed, Netflix’s pivot toward quality over quantity should drive robust monetization growth, particularly in advertising, which remains in its early stages. Netflix continues to guide to approximately $20 billion in content spend for 2026, and we believe strategically deploying that spend toward more premium content should unlock higher-quality engagement and, in turn, stronger monetization in the near term.”
Analyst: Brian Pitz, BMO Equity Research
Stock rating and price target: outperform, $135
Key takeaways: “Take the money and run!” That was the headline of Pitz’s report. But his commentary weighed the pros and the cons of the decision. “We are surprised to see Netflix walk away from the deal after a 3.3 percent increase in Paramount’s bid,” he shared. “But believe it may be the result of negative feedback from a meeting with Ted Sarandos and White House staff earlier today.”
“While Netflix will walk away with a $2.8 billion break-up fee (paid by Paramount), investors will question what Netflix will pivot to next to support long-term engagement/revenue growth,” Pitz also suggested. In that context, he pointed out that the $2.8 billion break-up fee paid represents 16 percent of the streamer’s 2025 cash content spend and around 30 percent of Netflix’s $9.5 billion in free cash flow recorded in 2025. “NFLX highlighted that it will resume its share repurchase authorization, and given the recent sell-off, we expect it to be active in repurchasing shares.”
Still, more questions will remain. “Walking away from the deal cleans up [the] near-term story, but will raise questions around longer-term growth drivers,” Pitz concluded. “Specifically, we believe investors may become concerned that one of Netflix’s core competitors, Paramount, will now be scaled more aggressively against Netflix. However, we are unsurprised to see Netflix shares react positively to the news, which provides near-term clarity on the story and avoids potential integration/execution risk.”
Analyst: Michael Morris, Guggenheim
Stock rating and price target: buy, $130
Key takeaways: Morris on Friday focused on the good news for Netflix’s stock. “Netflix’s withdrawal preserves capital flexibility and removes regulatory overhang that had weighed on shares since the deal announcement,” he highlighted.
And he underlined the positive narrative Netflix was leaning into. “The company’s statement emphasizing organic growth, continued content investment, and share repurchases signals a return to the standalone strategy that drove Netflix’s success prior to the WBD pursuit,” Morris explained.
His overall takeaway: “While the company loses access to HBO’s premium content library and Warner Bros.’ theatrical capabilities, management’s characterization of the deal as ‘nice to have’ rather than ‘must have’ suggests confidence in Netflix’s competitive positioning without these assets.”
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