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VT 
Netflix shares came under pressure after the company signalled a fresh acceleration in content spending while pressing ahead with its bid for Warner Bros. Discovery’s studio and streaming businesses.
The stock dropped by more than 5% in after-hours trading, adding to an already pronounced retreat from its June highs.
Market unease centres on the perception that cost discipline may be weakening again, even though revenue growth trends remain solid.
Netflix indicated that content expenditure is set to increase by roughly 10% this year, pushing total spend close to USD 20 billion. This will cover scripted television, films, live programming, and newer areas such as video podcasts.
All-Cash Offer Raises the Bar
The company upgraded its proposal for WBD’s studio and streaming assets to an all-cash bid of USD 27.75 per share, preserving an implied valuation of USD 82.7 billion.
While the move is intended to strengthen Netflix’s competitive position against other potential bidders, it has also heightened investor concerns around deal execution and regulatory risk.
Management continues to emphasise the strategic rationale of greater scale and deeper content ownership, but analysts caution that regulatory approvals could take 12 to 18 months, or longer.
A substantial break-up fee attached to the deal suggests a high level of commitment, reducing Netflix’s room to manoeuvre should market conditions turn less favourable.
Margins Under Scrutiny
Although Netflix’s projected revenue growth of 12%–14% for 2026 came in above expectations, its profitability outlook failed to impress.
Forecast operating margins of 31.5% undershot market estimates, reinforcing worries that rising content costs and potential integration expenses could limit near-term earnings upside.
The company also announced a pause in share buybacks, removing a layer of downside support at a time when valuations remain sensitive.
Technical Analysis
Netflix (NFLX) is trading around 88.05, up marginally by 0.14%, but recent price behaviour points to waning momentum following a sharp push to 89.83.
That rally was quickly followed by a steady pullback, with lower highs and lower lows forming as short-term moving averages begin to roll over.
Prices are now consolidating near the 88 handle, sitting below the 20- and 30-period moving averages, which signals short-term downside pressure. A dip to 87.14 suggests the market is testing support, while the subsequent bounce has lacked conviction in volume terms.
Unless buyers can regain the 88.50–89.00 zone swiftly, selling pressure may intensify. The near-term technical setup remains delicate, with range-bound trade likely in the absence of a clear catalyst.
Outlook
Netflix’s longer-term investment case continues to rest on its global footprint, pricing flexibility, and expanding advertising business. However, current market reactions suggest investors are placing greater emphasis on execution discipline alongside growth ambitions.
Until there is clearer visibility on margin sustainability and the trajectory of the WBD transaction, elevated volatility is likely to persist. Investors will be looking for proof that higher spending can deliver lasting earnings growth, not just headline expansion.
