Netflix released its fourth-quarter 2025 results yesterday evening, January 20, 2026, beating analysts' expectations for revenue and earnings per share. However, the stock fell 5% in after-hours trading, with investors appearing concerned about the implications of the Warner Bros. Discovery acquisition and 2026 guidance that, while solid, could signal a slowdown in growth.

The quarterly results confirm the streaming giant's dominant position in the global entertainment landscape, but raise important questions about the stock's short-term future. Let's analyze the numbers and the outlook for investors in detail.

Q4 2025 Numbers: Netflix Beats Wall Street Estimates

The fourth quarter of 2025 closed with results that exceeded market expectations across all key financial indicators. Revenue reached $12.05 billion , up 18% from the same period the previous year and slightly above analysts' estimates of $11.97 billion. Diluted earnings per share (EPS) came in at $0.56 , beating the Wall Street consensus of $0.55, although it missed the so-called "whisper number" of $0.57.

Operating profit reached $2.96 billion , up 30% year-over-year, while operating margin expanded by two percentage points to 24.5%. These figures demonstrate the strength of Netflix's business model, capable of growing both volumes and profitability in an increasingly competitive market.

During the quarter, Netflix surpassed the symbolic threshold of 325 million paid subscribers globally, now serving an audience approaching 1 billion people. Growth was primarily driven by the expansion of the subscriber base, price increases implemented in several markets, and strong growth in advertising revenue.

Record-Breaking Year: Full Year 2025: Lights and Records

2025 ended as a year of exceptional results for Netflix, which met or exceeded all of the financial goals announced at the beginning of the year. Annual revenue reached $45.2 billion , up 16% from 2024 (17% at constant currency), while operating margin reached 29.5% , up nearly 3 percentage points from 26.7% the previous year.

Of particular note is the performance of the advertising business. Despite only being the third year since the introduction of the advertising tier, advertising revenue has exceeded $1.5 billion , growing more than 2.5 times over 2024. This segment is becoming an increasingly important pillar of the company's monetization strategy.

Annual free cash flow reached $9.5 billion , exceeding the company's guidance of $9 billion, primarily due to the postponement to 2026 of a tax filing of approximately $700 million related to a dispute with Brazilian authorities. This figure confirms the extraordinary cash generation capacity of Netflix's business model.

Regional Performance: United States Leads, LATAM Surprises

A geographical analysis of the results reveals interesting trends that deserve investors' attention. The UCAN region (United States and Canada) remains the largest market, with revenues of $5.34 billion in the quarter, up 18% year-over-year. EMEA (Europe, Middle East, and Africa) generated $3.87 billion (+18%), confirming its position as the second-largest market.

Latin America 's performance is particularly interesting, with 20% growth at constant exchange rates, the highest among all regions. Currency devaluations, particularly those of the Brazilian real and the Argentine peso, have impacted the reported figures, but the underlying momentum remains very positive. Asia-Pacific continues to be a region of strong growth, with 19% growth at constant exchange rates.

The Warner Bros. Acquisition: The $82 Billion Heist

The dominant theme that characterized the quarterly results was undoubtedly the acquisition of Warner Bros. Discovery . Netflix announced a substantial change to the terms of the transaction alongside the results: the offer is now all-cash at $27.75 per WBD share , for a total equity value of approximately $72 billion and an enterprise value of $82.7 billion.

The change from a cash-and-stock offering to an all-cash offering addresses the need to expedite the timeline for WBD shareholder voting and provide greater certainty regarding the value delivered upon closing. The transaction is expected to close within 12-18 months and is subject to regulatory and WBD shareholder approvals.

To finance the transaction, Netflix secured a $42.2 billion bridge facility and has already secured a $5 billion revolving credit facility and a $20 billion delayed draw-term loan. The company plans to reduce its exposure to the bridge loan through future bond issuances and the accumulation of cash on its balance sheet. In this context, Netflix announced the suspension of its buyback program to raise cash to support the acquisition.

Guidance 2026: Solid but Slowing Growth

For 2026, Netflix expects revenue between $50.7 billion and $51.7 billion , representing 12% to 14% year-over-year growth. Operating margin is expected to be 31.5% , up 2 percentage points from 2025, and includes approximately $275 million in acquisition-related costs. Free cash flow is expected to be around $11 billion .

For the first quarter of 2026, guidance calls for revenue of $12.16 billion (+15.3% YoY) and EPS of $0.76, both exceeding market expectations. The company also expects advertising revenue to double in 2026 compared to 2025.

The Market Reaction: Why Is the Stock Falling?

Despite the better-than-expected results, Netflix shares fell about 5% in after-hours trading , falling to $82-$83, near their 52-week lows. At current prices, the stock is about 38% below its June 2025 high of $134.

The market's negative reaction appears to primarily reflect three factors. First, the uncertainty surrounding the Warner Bros. acquisition , a deal worth over €80 billion that carries significant execution risks, potential regulatory hurdles, and a significant increase in debt. Second, the 2026 guidance, which implies a slowdown in growth from 16% in 2025 to 12-14%. Finally, the suspension of the buyback , which deprives the stock of important technical support.

According to market data, analyst consensus maintains a "Moderate Buy" rating with an average price target of $125-$127, implying a potential upside of approximately 45% from current levels. However, several analysts have cut their targets in recent weeks: TD Cowen, for example, reduced its target from $142 to $115, while Wedbush cut its target from $140 to $115.

What to Expect in the Short and Long Term

Short Term Scenario (3-6 months)

In the short term, Netflix stock could continue to show high volatility, primarily driven by news of its Warner Bros. acquisition. The current price, around $82-$87, is in an important technical support zone, coinciding with the 52-week lows. A downside break of this level could trigger further selling, while a rebound could push the stock towards the resistance of $95-$100.

Catalysts to monitor in the coming months include: regulatory developments surrounding the WBD acquisition, potential competitive offers (Paramount Skydance is reportedly interested at $30 per WBD share), Q1 2026 results due April 16, 2026, and the performance of new content launches planned for the first half of the year.

Long-Term Scenario (12-24 months)

In the long term, the outcome of the Warner Bros. acquisition will be crucial. If successful, Netflix would control an unprecedented arsenal of intellectual property: from Harry Potter to Game of Thrones, from Casablanca to Stranger Things, from HBO to Netflix originals. The combination could generate annual synergies estimated at $2-3 billion by the third year post-merger, with the transaction expected to become accretive to GAAP EPS by the second year.

The advertising business represents the real long-term wild card. With revenues expected to double in 2026 and analyst projections that the advertising segment could potentially reach €8-9 billion by 2027, it could become a significant driver of margin expansion. The combination with the HBO Max library could also accelerate penetration of the ad-supported tier.

Conclusions for the Investor

Netflix's Q4 2025 earnings paint a picture of a company in excellent operational health, capable of generating profitable growth in a mature and increasingly competitive market. The above-expected results, margin expansion, and explosive growth in the advertising business are all positive signs.

However, the market's negative reaction highlights how investors are looking beyond the quarterly numbers, focusing on the risks associated with the Warner Bros. acquisition and the slowdown in growth implied by the 2026 guidance. The stock is now valued more reasonably than in recent months, with a forward P/E around 22x 2027 earnings, but uncertainty surrounding the deal remains high.

For investors with a long-term horizon and a good tolerance for volatility, the current pullback could represent an opportunity to enter what remains the undisputed leader in global streaming. For those preferring a more cautious approach, waiting for greater clarity on the outcome of the Warner Bros. acquisition may be the wisest option. Either way, Netflix remains a stock to monitor closely in the coming weeks.