Netflix: A Most Promising Venture

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Now, it would have been frightfully easy to assume the worst, you see. Netflix, that most energetic of streaming concerns, had designs on acquiring, or a goodly portion of, Warner Bros. Discovery. A rather ambitious undertaking, involving sums that would make a lesser company positively wobble. They were prepared to open the coffers, a truly generous gesture, but were ultimately outmaneuvered by Paramount Skydance, a development which, while perhaps a trifle disappointing for Netflix, sets the stage for a positively ripping rivalry.

Shareholders, bless their cautious hearts, weren’t entirely thrilled with the notion of such a splurge. The stock, understandably, took a bit of a dip when the idea first surfaced. It’s only recovered about half of that lost ground, which suggests a lingering apprehension about what Warner Bros. and Paramount might accomplish in tandem. A perfectly reasonable concern, of course, but one, I venture to suggest, that’s rather missing the point.

The real question, you see, isn’t whether Netflix should be fretting over its rivals, but whether the market is correctly assessing its own future vim and vigour. More to the point for those of us with a few shillings to invest: is Netflix a buy, a sell, or simply something to regard with a polite nod and then move along?

Better Off Without It, What?

Most shareholders, it appears, are now rather relieved that Netflix won’t be shelling out a staggering eighty-three billion dollars for Warner’s studios, HBO Max, the DC comics franchise, and all the other bits and bobs. Netflix wanted these assets, naturally, but sometimes, a company is best served by not getting exactly what it wants. This, I suspect, is one of those occasions.

The most obvious reason is, of course, the cost. Eighty-three billion dollars is a sum that would make even a Rothschild blush. And for businesses that collectively generated a mere twenty billion in revenue last year, and turned a modest two billion of that into earnings? A trifle steep, wouldn’t you say? While some cost savings and revenue synergies might have been achieved (Netflix suggested two to three billion annually), it’s doubtful they would have justified the price.

Even if the price had been more palatable, there’s the considerable challenge of integrating a gaggle of disparate business units and brands. It’s a bit like trying to herd cats, really. And even if they managed it, consumers, already overwhelmed by streaming choices (and the ever-increasing cost of them!), might not have embraced a new entertainment behemoth.

Industry researchers at Antenna report that churn rates among US streaming customers have been creeping upwards since 2023, despite the business appearing mature. A most disconcerting trend. Even seamlessly folding HBO Max into Netflix’s platform might not have had the desired effect, particularly if it meant a price increase. A dashedly clever bit of code won’t solve that, you know.

There’s a more philosophical upside to the Warner deal falling through, you see. Clarity about its future. Netflix now has a clear path. Warner Bros. Discovery was its only real acquisition target, so now it can go full throttle on organically expanding its reach with initiatives like live sports, advertising, and developing content that can be monetized beyond the television screen. It will take longer, naturally, but in the long run, it should be considerably better.

The kicker, as they say? While paying eighty-three billion for Warner Bros. Discovery would have saddled Netflix with billions in debt, rival Paramount Skydance is now on the hook for fifty-four billion in new indebtedness, plus another forty-one billion worth of new shares. That could leave them fiscally stifled for the foreseeable future, limiting their investment opportunities. Netflix, conversely, remains remarkably flexible, allowing it to manoeuvre with a delightful agility.

The Final Call, What Ho!

But what does this mean for the stock’s attractiveness right now? It’s all a net positive, and one that’s not yet reflected in the ticker’s present price. Therefore, the shares are a buy for 2026, particularly given they’re still down nearly 10% from when the Warner Bros. Discovery acquisition was first mooted, and nearly 30% from their mid-2025 peak.

Not only does the current price fail to reflect the upside of not acquiring Warner, but it also underestimates Netflix’s position as the premier name in streaming – here and abroad.

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Analysts expect Netflix’s top line to grow by more than 13% this year without Warner, and then improve by nearly 12% next year, extending a long-established growth pace that’s likely to pump up its profits even faster. The vast majority of analysts covering this company also rate its stock as a strong buy, with a consensus target of $113.09, 20% above the ticker’s present price.

Bottom line: There’s not a thing wrong with what and where Netflix is today. Don’t overthink things, even though plenty of other investors are doing just that. A most promising venture, indeed.

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2026-03-20 11:15