Netflix Stock Faces High-Stakes Earnings Amid Warner Bros Deal

Netflix is once again at the center of Wall Street’s attention, with its fourth-quarter earnings report set to drop after the market closes on January 20, 2026. The streaming giant, already a household name, is navigating a swirl of anticipation, skepticism, and excitement as it pursues a landmark acquisition of Warner Bros. Discovery—an audacious move that could reshape the entertainment industry and Netflix’s own trajectory.

The stakes couldn’t be higher. Netflix’s plan to accelerate revenue growth by acquiring Warner Bros., announced on December 5, 2025, has sent ripples through both Hollywood and the financial world. If the deal closes, Netflix would become the largest global streamer, boasting a staggering 428 million subscribers, according to The Economic Times. Yet, the deal is not without hurdles: it faces fierce competition from Paramount Skydance, and regulatory scrutiny is expected, especially given concerns about antitrust violations. Netflix maintains it is competing with YouTube—the most-watched TV distributor in the U.S.—but regulators may see things differently.

Investors are hungry for clarity. Tuesday’s earnings call marks the first time Netflix’s executives will address analysts since the Warner Bros. announcement. They’ll need to convince Wall Street and watchdogs alike that the acquisition won’t run afoul of competition laws. As Reuters reported, Netflix’s argument hinges on the breadth of its competition, but skepticism lingers.

Meanwhile, the market has been anything but calm. Netflix’s stock, trading under the ticker NFLX, closed at $88.00 on January 19, 2026—a sharp drop of 29% over the past six months, most of which occurred after the Warner Bros. bid became public. The day’s trading saw the share price fluctuate between $87.78 and $88.51, with an unusually high volume of 48,130,497 shares changing hands. Technical signals paint a bearish picture: the relative strength index (RSI) stands at a low 9.53, and the average directional index (ADX) is a steep 77.68, both indicating strong downside momentum. The 50-day and 200-day moving averages, at $99.70 and $113.08 respectively, are well above the current price—hardly a comforting sign for bulls.

Yet, not everything is doom and gloom. Netflix’s fundamentals remain robust. Key metrics show an earnings per share (EPS) of $2.39, a price-to-earnings (PE) ratio of 36.82, and an operating margin near 29.14%. Free cash flow per share is $2.11, and the company’s debt-to-equity ratio is a manageable 0.56, with an interest coverage of 17.21. These numbers suggest that, despite the recent selloff, Netflix is hardly on shaky ground. In fact, the company’s market capitalization stands at a hefty $372.88 billion, with 222 million paid members globally—a testament to its enduring reach.

All eyes are now on the Q4 2025 earnings. Wall Street expects Netflix to report EPS of $0.55, marking a 28% year-over-year increase, and revenue of $11.97 billion—a 17% jump from the previous year, according to TipRanks. Analysts attribute this expected growth to Netflix’s international expansion, a strong content slate, and rising ad revenue. The fourth quarter was reportedly buoyed by hits like Stranger Things, a record-setting Christmas Day NFL game, and the Jake Paul boxing match, all of which drove robust user engagement.

But there’s a catch. KeyBanc analyst Justin Patterson recently lowered his price target for Netflix from $139 to $110, citing near-term uncertainty around the Warner Bros. deal and tough comparisons with the 2025 content lineup. "Barring an earlier-than-expected price increase," Patterson expects Netflix’s 2026 revenue growth outlook to be in line with expectations—about 13%—but sees "softer operating margins" ahead. Despite these pressures, Patterson remains bullish on Netflix’s long-term prospects, pointing to untapped monetization opportunities and potential margin catalysts.

BMO Capital’s Brian Pitz is similarly optimistic, reiterating a Buy rating with a $143 price target. Pitz acknowledges concerns about slowing growth in 2026 and the risks of integrating a massive acquisition like Warner Bros., but highlights that Q4 engagement was "robust" thanks to Netflix’s blockbuster content. He projects full-year 2026 revenue growth to decelerate to about 13.5%, down from an estimated 16% in 2025, but sees the company’s fundamentals as solid.

Artificial intelligence is also weighing in. TipRanks’ AI Analyst gives Netflix an Outperform rating, with a price target of $103—an implied upside of 17.1%. The AI model is bullish due to Netflix’s strong financials and positive signals from the earnings call, but it does warn about "weak technicals and a premium P/E valuation." Options traders are bracing for volatility, expecting a 7.78% move in either direction immediately after the earnings release, based on at-the-money straddle calculations.

Consensus among Wall Street analysts is moderately positive: 26 Buys, nine Holds, and two Sells, with an average price target of $126.23—suggesting a potential upside of 43.4%. Meyka AI, another forecasting tool, rates Netflix stock a B+ (BUY) with a monthly price forecast of $221.02, implying a staggering 151.14% upside from current levels. However, as always, these are projections, not guarantees.

One unexpected twist in the saga: U.S. President Donald Trump, according to his latest disclosures, purchased up to $2 million in Netflix and Warner Bros. Discovery bonds between mid-November and late December 2025—just weeks after the merger was announced. While the move raised eyebrows, it underscores the high-profile attention and stakes surrounding the deal.

For investors, the path forward is anything but clear-cut. The main risks lie in weaker-than-expected subscriber additions, lower average revenue per user (ARPU), rising content costs, and any softness in margin guidance. Netflix’s high valuation multiples—price-to-sales at 8.60 and price-to-free-cash-flow at 41.58—leave little room for error. Any disappointment on growth or guidance could trigger further downside, while a strong report might spark a sharp rebound.

Ultimately, Netflix’s Q4 earnings and the fate of the Warner Bros. acquisition will set the tone for 2026. Investors, analysts, and industry insiders alike are watching closely, knowing that whatever happens next could reshape not just Netflix, but the entire streaming landscape.