Core Insights - Netflix has shown strong growth in 2025, surpassing 325 million paid memberships and achieving 18% revenue growth, but investors are concerned about its high spending plans for 2026 and the acquisition of Warner Bros. [2][3] Financial Performance - In Q4 2025, Netflix reported 18% revenue growth, an operating margin of 25%, and a 30% increase in operating income [3] - The company’s stock fell by approximately 5% in after-market trading following the earnings report, indicating investor skepticism [3] Acquisition Plans - Netflix intends to acquire Warner Bros. for $72 billion, valuing the assets at $27.75 per share, and has shifted its bid to an all-cash offer to facilitate shareholder approval [5][6] - To finance the acquisition, Netflix has arranged $42.2 billion in bridge loans and is pausing share buybacks to manage cash flow [8] Content Spending - Netflix spent about $18 billion on programming in 2025 and plans to increase this budget by 10% in 2026, raising concerns among investors about the sustainability of such high spending [10] - The proposed acquisition price for Warner Bros. is four times the total content spending of Netflix in 2025, leading to questions about the strategic allocation of resources [11]

Core Viewpoint - Netflix's shares declined over 4% intra-day following weaker-than-expected guidance while pursuing a significant acquisition of Warner Bros. Discovery's studio and streaming assets [1] Financial Performance - For Q4 ended December 31, Netflix reported earnings of $0.56 per diluted share on revenue of $12.05 billion, slightly exceeding analyst expectations of $0.55 per share and $11.97 billion in revenue [2] - The company ended the year with 325 million global paid subscribers, and advertising revenue more than doubled from 2024, reaching over $1.5 billion [2] Future Guidance - For Q1, Netflix forecasts earnings of $0.76 per share on revenue of $12.16 billion, below analyst estimates of $0.81 per share and $12.19 billion in revenue [3] - For the full year 2026, projected revenue is between $50.7 billion and $51.7 billion, compared to forecasts of $51.03 billion, indicating annual revenue growth of 12% to 14%, a slowdown from the 16% growth rate in 2025 [3] Content and Market Dynamics - The company noted a decline in viewing hours for non-branded licensed content due to increased licensing activity in 2023 and 2024, influenced by the 148-day Writers Guild of America strike that affected production [4] - The guidance was released alongside news of Netflix enhancing its $72 billion offer for Warner Bros.' studios and HBO Max streaming business, aiming to strengthen its competitive position against Paramount Skydance [4]