After the bidding war for Warner Bros. ended, Discovery With streaming giant Netflix withdrawing from the race, leaving the field to David Ellison’s Paramount late Thursday, the David Zaslav-led Hollywood studio is expected to soon make a massive $111 billion deal from Ellison’s team official.
Wall Street analysts have begun to comment on what the decision means for Netflix, especially since it halted its pursuit of WBD so quickly, well before Wednesday’s deadline to improve its own bid, and on the day that saw co-CEO Ted Sarandos travel to Washington, D.C.
Why did Netflix back away from a high-stakes Hollywood game of poker, and what does that mean for its strategic focus and potential future spending? In a sign that the company has regained at least some control over its stock narrative, many on Wall Street rejoiced that Netflix can now return to focusing on its streaming strategy.
A key data point underscoring the excitement around this: The carrier’s stock jumped 7.9 percent in premarket trading Friday to $91.31 as of 8 a.m. ET. Netflix stock closed at $103.22 on December 4, the day before the initial announcement of the WBD-Netflix deal.
However, investor concerns about the outlook for user engagement and questions about where Netflix could look to invest next are likely to persist.
Here’s an early look at the reaction of Wall Street analysts and takeaways so far.
analyst: Laurent Yoon, Bernstein
Stock rating and target price: Excellence, $115
Main takeaways: “Netflix is going and everyone wins,” was Yoon’s verdict in the headline of his report on Friday. “Within hours of WBD notifying Netflix that it had formally recognized Paramount’s bid as the superior bid, Netflix withdrew. This meeting in DC may not have gone well, and they were prepared to respond quickly. Netflix remains a disciplined allocator of capital – a hallmark of its success. We believe Netflix’s decision to withdraw creates a win-win outcome.” He reiterated his assessment of Netflix’s “outperformance,” noting its “near-term upside and long-term growth driven by its fundamentals.”
Yoon expects the carrier’s shares to recover “to an above-market multiple in the near term, meaning more than $90 per share,” Yoon’s report also highlighted. “The burden of the deal disappears – at least for now – and management can refocus on what drives their business.”
However, the analyst emphasized that Netflix is ”not in trouble,” pointing to the possibility of investors refocusing on fundamentals. “Engagement concerns will persist as platforms like YouTube take up an increasing share of viewing time. But as Q4 2025 reminded us, better content drives higher engagement, and Netflix is once again increasing its content spending to address this issue. We also see more upside once prices are raised – it’s time and [the company is] No longer constrained by regulatory optics – and raising the margin guide, which would translate directly into additional earnings per share and higher valuation multiples.
Yoon also touched on a “lingering question,” which other potential deals are, or “what other options Netflix could consider with an envelope of more than $70 billion to secure the long-term sustainability of its content production and distribution engine.” His take: “It has ambitions far beyond the additional content budget and repurchases.”
analyst: Peter Supino, Wolf Research
Stock rating and target price: Excel, $110, up $15
Main takeaways: “Paramount wins for Warner Bros; Netflix wins anyway,” the analyst summarized in the headline of Friday’s report. “Although Netflix management seemed really excited about Warner Bros., we thought Netflix would pull out after the Warner board declared the Paramount deal superior,” he wrote. “If Netflix raised its offer, it risked being seen as desperate, and it could have taken years to wash away that perception. Ultimately, WBD was more of a nice-to-have than a necessity to acquire Netflix, and Netflix’s refusal to raise its offer just a few hours into the four-business-day review period is a sign of Netflix’s confidence in its independent prospects.”
Wolf doesn’t expect Netflix stock to go right back to its old high-flying ways. “We will not guarantee Netflix price/profits [multiple] Back above 30 times as corporate multiples compress, and investors will read into Warner Bros.’s bid. As a sign of weakness.
But he raised his price target from $95 to $110, emphasizing that “pulling out of the Warner auction gives Netflix $2.8 billion in cash, significantly less debt, stock buybacks, a higher return on invested capital, and simpler operations. Investors will eagerly support the growth strategy they know and love.” Wolf’s conclusion about Netflix’s future focus: “A return to simply being dominant.”
analyst: John Blackledge, T.D. Quinn
Stock rating and target price: Purchase, $112
Main takeaways: Blackledge said he was “surprised at how quickly Netflix pulled out (we were expecting them to match Paramount’s latest offering),” but stressed that management’s comment that WBD was “nice to have” but not a “must have at all costs” was “a sentiment we share.” “Netflix will also not have to manage a potentially complex integration process for huge theatrical works,” he added.
Analyst Conclusion: “Netflix We see Netflix as well positioned to continue driving viewership gains in both the U.S. and globally amid the move to on-demand streaming TV.”
Blackledge colleague and entertainment industry analyst Doug Kreutz highlighted how quickly the streaming giant was falling out of the race on WBD. “Netflix’s response to the Warner board’s announcement took a very short time — less than two hours — which suggests to us either that the decline in Netflix stock since it made its offer had already caused Netflix management to reevaluate its enthusiasm for the deal, or that the process had always been mostly about trying to convince Paramount Skydance to pay as much money as possible to acquire Warner, and Netflix management was not inclined to press its luck any further.”
analyst: Rob Fishman, Moffett Nathanson
Stock rating and target price: Purchase, $115
Main takeaways: Following the news that “Netflix has refused to raise its offer for Warner Bros. and continues the bidding war, Paramount’s ‘necessary’ deal is set to trump Netflix’s ‘sweetheart’ opportunistic deal,” MoffettNathanson’s expert wrote in his report.
“To our surprise, Netflix refused to even take the four-day matching period to evaluate whether or not to increase its offer, and instead decided to withdraw completely,” he stressed. “By moving forward quickly and avoiding further uncertainty for the company — which is reflected in the recent stock price — Netflix signals confidence in the fundamental strength of its core business and the fact that this opportunity was much more offensive than defensive in nature. … We believe Netflix would have been able to monetize the existing Warner IP much better than WBD today given the relative scale advantages of its distribution platform (particularly internationally) and proven success in creating buzz around library content and expanding its reach (think… SuitsBut on steroids). This deal would have accelerated Netflix’s growth on top of its current strong trajectory by attracting new subscribers, reducing churn, and driving greater engagement.
However, Netflix stock has fallen nearly 30 percent since the WBD deal was announced in early December. “The defensive argument led to Netflix shares rising,” Fishman explained. “Questions arose about whether Netflix was turning to Warner Bros. because its core growth story had ended and it had to acquire these assets to revive the business.” With a blockbuster deal now off the table, “Netflix could consider other ways to allocate this capital to premium content, including high-profile sports rights (read: NFL) and other licensing deals like the recent Sony Pay 1 movie deal,” the analyst concluded. “Although engagement growth has slowed, Netflix is pivoting toward quality rather than quantity It should lead to strong monetization growth, especially in advertising, which is still in its early stages. Netflix continues to drive nearly $20 billion in content spending for 2026, and we believe strategically spreading this spending toward more premium content will unlock higher-quality engagement and, in turn, stronger near-term monetization.”
analyst: Brian Betz, BMO Equity Research
Stock rating and target price: Excel, $135
Main takeaways: “Take the money and run!” That was the title of Betz’s report. But his comment weighed the pros and cons of the decision. “We were surprised to see Netflix pull out of the deal after a 3.3 percent increase in Paramount’s offer,” he said. “But I think that may be a result of negative feedback from a meeting with Ted Sarandos and White House staff earlier today.”
“While Netflix will exit with a $2.8 billion breakup fee (paid by Paramount), investors will wonder what Netflix will focus on next to support long-term syndication/revenue growth,” Betz also suggested. In this context, he noted that the $2.8 billion split fee paid represents 16 percent of 2025 cash content spending and about 30 percent of Netflix’s $9.5 billion free cash flow recorded in 2025. “NFLX has highlighted that it will resume its share repurchase authorization, and given the recent sell-off, we expect it to be active in share repurchases.”
However, there will still be more questions. “Exiting the trade cleans up [the] “It’s a short-term story, but it will raise questions about long-term growth drivers. Specifically, we believe investors may be concerned that one of Netflix’s primary competitors, Paramount, will now scale more aggressively against Netflix. However, we are not surprised to see Netflix shares react favorably to the news, providing near-term clarity on the story and avoiding potential integration/execution risks,” Betz concluded.
analyst: Michael Morris, Guggenheim
Stock rating and target price: Purchase, $130
Main takeaways: Morris on Friday focused on the good news for Netflix stock. He stressed that “Netflix’s withdrawal maintains capital flexibility and removes the regulatory burden that has affected the shares since the deal was announced.”
He emphasized the positive narrative that Netflix leans toward. “The company’s statement emphasizing organic growth, continued investment in content, and stock buybacks signals a return to the standalone strategy that drove Netflix’s success before pursuing WBD,” Morris explained.
His overall takeaway: “As the company loses access to the premium content library of HBO and Warner Bros. Theatrical Capabilities Management’s description of the deal as a “nice to have” rather than a “must have” indicates confidence in Netflix’s competitive position without these assets.
