Netflix’s Stock Decline Amid Warner Bros. Acquisition: Drivers, Antitrust Risks, and Valuation Pressures

This analysis leverages internal market data and social media insights [0]. On December 5, 2025, Netflix announced an $82.7B acquisition of Warner Bros. to strengthen its streaming market position via an expanded content library [0]. However, the company’s stock declined 12.21% from December 1-23, 2025—contrasting with stable overall market conditions and gains by competing streaming giants Disney and Amazon [0].

Three primary factors drive the decline:

1. Antitrust Scrutiny
   : The deal faces intense review from U.S. (DOJ, FTC) and EU regulators, with bipartisan political opposition (including Senator Elizabeth Warren) over reduced streaming competition [0], raising uncertainty about approval and timeline.
2. Valuation Pressures
   : Netflix traded at a forward P/S ratio of 9.01X, significantly above the industry average of 4.17X [0], making the premium seem unsustainable even with acquisition benefits.
3. Earnings Miss and Bid Uncertainty
   : A $619M one-time Brazilian tax charge led to a Q3 2025 EPS miss [0], eroding investor confidence. Additionally, Paramount’s hostile bid for Warner Bros. adds complexity to the deal’s outcome [0].

• Antitrust Risks Include Political Opposition
  : Bipartisan pushback amplifies regulatory uncertainty, increasing the likelihood of prolonged review or blockage [0].
• Valuation Was a Pre-Existing Vulnerability
  : The high P/S ratio made the stock sensitive to negative signals, even with positive acquisition news [0].
• Earnings Miss Amplified Sentiment
  : The non-recurring tax charge coincided with acquisition and antitrust concerns, creating a negative sentiment storm [0].
• Paramount’s Bid Adds Fragility
  : A hostile bid may force Netflix to raise its offer or lose the acquisition entirely [0].

• Antitrust Delays/Blockage
  : Prolonged review or rejection could cause further volatility and lost strategic opportunities [0].
• Valuation Correction
  : The 12% decline may not fully adjust for the premium, risking additional downside [0].
• Deal Failure Costs
  : Blocked deals incur transaction costs and disrupt strategic planning [0].

• Enhanced Market Position (If Approved)
  : Warner Bros.’ content library could boost subscribers and competitive edge [0].
• Valuation Realignment
  : A reduced valuation may attract long-term investors if the acquisition delivers value [0].

Netflix’s December 2025 stock decline stems from antitrust scrutiny, valuation pressures, a Q3 earnings miss, and Paramount’s hostile bid. Antitrust risks are the primary threat to the acquisition’s completion, while valuation pressures may persist regardless. The decline occurs amid stable markets and competitor gains. Investors should evaluate these factors when assessing post-deal prospects.