Netflix shares fell by over 3% after announcing it will acquire Warner Bros. Discovery for $82 billion, or $30 per share. This suggests that Netflix’s growth is slowing down and it needs to find new revenue sources. In the past, Netflix had a high stock value due to its unique growth strategy. However, this acquisition hints that the company’s innovation may be fading. Technically, Netflix’s stock has broken a key trendline established in October 2023. This break indicates a possible long-term decline in the stock value. Predictions suggest it may drop to $70 per share by 2026, aligning Netflix’s worth with the wider streaming industry as it shifts its growth approach. The market’s negative reaction to the acquisition signals an opportunity to bet against Netflix. The breakdown of key support levels suggests it’s likely to continue falling. Traders should consider purchasing put options that expire in January and February 2026 to take advantage of this anticipated weakness. This situation is reminiscent of the subscriber growth panic from 2022, but now management has acknowledged that its previous growth model has failed. Recent figures show that in Q3 2025, subscriber growth slowed to just 1.5 million worldwide, well below the boom seen after the password crackdown in 2024. This acquisition seems like an expensive way to buy the growth that Netflix can no longer achieve on its own. We also need to think about the huge debt this deal creates, which will reshape Netflix’s financial landscape negatively. Warner Bros. already had over $40 billion in debt, and adding the $82 billion acquisition cost will drive Netflix’s debt-to-equity ratio from a manageable 0.8 to over 2.5. This change turns Netflix from a flexible tech leader into a heavily indebted media company with slow growth. As implied volatility spikes due to this news, buying puts directly has become costly. A smarter approach would be to use credit spreads, like selling call spreads, or initiating debit spreads, such as bear put spreads, to reduce entry costs. This allows us to maintain a bearish outlook while minimizing the effects of high premiums. Breaking the trendline from October 2023 is a significant event that alters the stock’s character. Any small rally should be viewed as a chance to increase short positions, as the current chart indicates a sustained decline. The $70 price target for 2026 is looking more likely as the stock starts to lose its long-held tech premium.

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