Netflix: Short-Term Chaos, Long-Term Opportunity?

Netflix stock has had a rough few weeks. Shares are down ~13% over six days as investors panic over a potential Warner Bros Discovery acquisition and how it would be financed.

The market hates uncertainty...and takeover battles are peak uncertainty, especially given the political environment (including the FTC).

But zoom out for a moment.

Even after the selloff, Netflix is still up ~8.5% in 2025, and the recent drop has materially improved the valuation.

The stock now trades around 30x 2026 earnings, down from 43x just a few months ago. That’s a meaningful reset.

The bear case is loud:

• Netflix may be overpaying for Warner Bros.

• It would take on roughly $50B in new debt

• Regulatory scrutiny could drag the deal into 2026

• Short-form video (TikTok, etc.) is real competition

Fair concerns...but also short-term ones.

The bull case remains intact:

• Netflix’s content flywheel is still working: more subs → more content → more subs

• Warner Bros. would add iconic IP (Harry Potter, DC, Sopranos), strengthening that flywheel

• Analysts projecting ~40% margins by 2028 vs. ~27% last year

• Even without the deal, Netflix has a strong standalone growth path

• Live sports is emerging as a real incremental growth lever

The market is treating this as a make-or-break moment. It’s not. At worst, Netflix walks away with a cleaner balance sheet and a cheaper stock. At best, it locks up world-class IP and compounds margins for years.

Volatility is the price of admission for long-term compounding.

Could be a buy..?