Netflix shares hit a 52-week low of $81.93 on Wednesday, and the culprit isn't subscriber numbers or content performance—it's the $83 billion Warner Bros. acquisition that's making Wall Street nervous.
The irony is almost too perfect. Netflix, the company that spent two decades disrupting traditional Hollywood studios, is now stumbling because it's paying too much for one. According to The Hollywood Reporter, multiple analysts slashed their price targets following the company's Q4 earnings, despite Netflix adding 23 million subscribers to reach 325 million globally.
The fundamentals look solid on paper. KPop Demon Hunters set a new viewership record. Revenue is projected to grow 12-14% in 2026. The ad tier is doubling to $3 billion. But management's profit margin guidance—just 31.5%, barely up from 30.5%—tells the real story: Netflix is spending so much on content and acquisition costs that even massive scale can't save the margins.
Brian Pitz at BMO Capital Markets summed it up perfectly: "Netflix is trying to be Superman, but not immune to Kryptonite." The Kryptonite, in this case, is an $83 billion bet that traditional studio IP is worth buying when you've spent 15 years proving you could succeed without it.
What's particularly fascinating is why Netflix felt compelled to make this deal. In defending the acquisition to regulators, management pointed to competition from YouTube, Amazon, Apple, and Instagram—a tacit admission that the real threat isn't other streamers, it's the entire internet. When Gen Z prefers free social media platforms to your expensive long-form content, buying Warner Bros. isn't a growth strategy. It's a hedge against obsolescence.
The market clearly agrees. Analysts expect the stock to stay suppressed until the deal closes—assuming it passes the April shareholder vote, which is looking less certain by the day. Netflix has successfully argued it needs Warner Bros. because of intense competition. Now investors are asking: if competition is that fierce, why pay $83 billion for a legacy studio?
In Hollywood, nobody knows anything—except that paying top dollar for yesterday's playbook rarely works out. Netflix disrupted the industry by not being Warner Bros.. Now it's betting its future on becoming exactly that. The stock price suggests Wall Street isn't buying it.
