Netflix’s Year-End Financial Snapshot and the Warner Bros. Bid
Netflix wrapped up the previous year with solid financial results, although it faced a slowdown in subscriber growth. This backdrop underscores the significance of its contentious $72 billion offer to acquire Warner Bros., which operates HBO Max among other ventures.
The fourth-quarter figures released on Tuesday exceeded what stock market analysts had anticipated. Nonetheless, Netflix also reported that it finished the year with over 325 million subscribers worldwide, indicating a gain of around 23 million subscribers since 2024.
However, this subscriber growth in 2025 marks a stark decline from the 41 million added in 2024. This change is raising concerns among investors about whether Netflix’s expansion has reached its peak. Perhaps the introduction of an ad-based, low-cost version in 2022 played a role in that initial surge.
Management also suggested that profits for the first quarter of the year will fall short of what analysts expect. They mentioned that Netflix would pause stock buybacks while finalizing its deal with Warner Bros. Revenue growth is projected to slow to between 12-14% this year, a drop from 16% in 2025, although ad revenues are anticipated to double.
“All in all, it’s looking like a challenging start to the year,” commented Thomas Monteiro, an analyst from Investing.com.
After hours, Netflix’s shares dipped almost 5%, despite the fact that profits and revenues for the past quarter surpassed expectations. The reported profit stood at $2.4 billion, translating to 56 cents per share—up 29% from the same time last year. Sales climbed 18% compared to the prior year, exceeding $12 billion.
The financial results almost faded into the background considering the stakes at play in the bidding war for Warner Bros. Discovery.
Recently, Netflix shifted its approach, incorporating an equity component into an all-cash proposal. This was intended to streamline the process and make it easier for Warner Bros. Discovery shareholders to bypass Paramount’s competing offer.
Warner Bros. has affirmed its commitment to securing a deal with Netflix. Meanwhile, Paramount appears undeterred, possibly crafting a more attractive counter-offer that might intensify the competition.
During a conference call on Tuesday, Netflix co-CEO Ted Sarandos seemed to send a cautionary message to Paramount. He recalled how Netflix successfully navigated competition from companies like Walmart and the now-defunct Blockbuster when it began as a DVD rental service. “We’re not accustomed to competition, but we’ve adapted to change,” Sarandos mentioned.
Netflix now faces the task of convincing U.S. regulators that incorporating HBO into its already leading streaming platform won’t curb competition or exacerbate price hikes, which have already been noticeable in recent years.
This cloud of uncertainty is reflected in Netflix’s stock, which has dropped 20% since the announcement of the Warner Bros. Discovery deal last month. This issue is likely to linger throughout much of the year, given that the acquisition won’t be finalized until Warner Bros. Discovery separates from its cable TV segment, a process anticipated to take six to nine months.
“We remain dedicated to our mission of entertaining the world,” Sarandos stated.
