Netflix reported Q4 and full-year 2025 financial results, causing its stock to drop 3%. Shares are down 37% from their 2025 peak. Growth is expected to slow, and uncertainty surrounds the Warner Bros. Discovery acquisition, leading to a low forward P/E ratio.

In Q4, Netflix beat Wall Street forecasts with $12.05 billion in sales and an EPS of 56 cents. Full-year 2026 sales are projected at $51.2 billion, a 13% growth rate. The company expects $11 billion in free cash flow but faces challenges in sustaining growth organically.

Netflix’s acquisition of Warner Bros. is viewed as a growth accelerator, with potential boosts to EBITDA and subscriber engagement. However, the $82.7 billion deal is all-cash, straining Netflix’s finances and suspending share buybacks. Uncertainty looms over regulatory approval and potential rival bids.

Analysts foresee a 35% upside potential for Netflix, with a consensus price target near $121. New forecasts point to an average price target of $117, indicating a 38% upside. Despite uncertainty, the stock’s discounted forward P/E ratio suggests long-term benefits from the Warner Bros. acquisition.

Read more at Nasdaq: Netflix Stock Drops 35%+ After Q4 as WBD Deal Risk Rises