This Analyst Thinks It’s Finally Time to Buy the Dip in Netflix. Here’s Why

Core Viewpoint - Wall Street is skeptical about Netflix's proposed $72 billion acquisition of Warner Bros. Discovery's studio and HBO assets, leading to a significant stock decline of over 33% despite a previous rally of 631% from mid-2022 to mid-2025 [2][9]. Group 1: Financial Performance - Netflix's total market capitalization is currently $350 billion, and the proposed acquisition would significantly impact its enterprise value, requiring substantial debt that could affect operating cash flow [3]. - In Q4 2025, Netflix reported revenue of $12.05 billion, exceeding analyst expectations of $11.97 billion, with a sales growth of 17.6% and a net income profit growth of 29% [6]. - Analysts expect Netflix's earnings per share (EPS) to be $3.1 for the full year, reflecting a 23.5% increase, and $3.8 for 2027, with a 22.2% increase, supported by strong subscription retention and advertising revenue [8]. Group 2: Market Sentiment and Analyst Ratings - Despite the stock's decline, some analysts are becoming more positive about Netflix, with Freedom Capital Markets upgrading the stock from Hold to Buy with a price target of $104, and Phillip Securities upgrading from Sell to Accumulate with a price target of $100 [5]. - The company's Q1 outlook is less optimistic, projecting 15% growth in both earnings and revenue, which is 3% lower than the previous year, but still considered solid for a mature business [7].