Netflix ended last year with strong financials, but a slowdown in subscriber growth. Its $72 billion bid for Warner Bros. signals a strategic move to add HBO Max to its streaming lineup, with 325 million worldwide subscribers by the end of 2025.

The dramatic slowdown in subscriber growth raises investor concerns that Netflix’s expansion has peaked since introducing a low-priced, advertising-supported version in 2022. Profit forecast for Jan-March falls below analysts’ expectations, with revenue growth expected to taper off from 16% to 12-14% this year.

Netflix’s shares dropped nearly 5% in extended trading despite exceeding profit and revenue expectations. Earnings rose by 29% to $2.4 billion, with revenue surpassing $12 billion, an 18% increase from the previous year. The bidding war to acquire Warner Bros. Discovery adds complexity to Netflix’s growth strategy.

Netflix converted its original stock-based offer for Warner Bros. Discovery into an all-cash deal to simplify the process. Paramount continues to challenge Netflix’s bid, potentially escalating the bidding war. U.S. regulators will scrutinize the deal to ensure fair competition and pricing for consumers.

Netflix co-CEO Ted Sarandos emphasized Netflix’s history of competition amid the bidding war, warning Paramount of the company’s resilience. The uncertainty surrounding the deal has caused Netflix’s stock to drop by 20%, impacting its performance in the market.

The ongoing battle for Warner Bros. Discovery will likely affect Netflix’s operations throughout the year. The acquisition process, expected to take six to nine months, will test Netflix’s ability to navigate regulatory challenges and competition in the streaming industry.

Read more at Yahoo Finance: Netflix delivers solid 4th quarter, but stock sinks amid worries about slowing subscriber growth