Netflix (NFLX) reportedly lost out to Fox (FOX) in a bid to take over streaming platform Roku (ROKU) this week. This comes after David Ellison lost out to Paramount (PSKY) in a bid to buy Warner Bros. Discovery (WBD).
Another thing Netflix is losing is market cap, as investors look at these deals and slow growth and hit the sell button on the stock.
AlphaSpace Intel: Netflix stock ended Tuesday’s session down 4%, and has fallen 27% over the past two months after a brief rally from late February to mid-April. Year to date, the stock is down 16% compared to the S&P 500’s 10% gain.
Yahoo Finance AlphaSpace data shows that Netflix shares are trading below the 50-day, 100-day and 200-day moving averages.
Analysis: When Netflix reports second-quarter earnings after the close of trading on July 16, the company will have plenty of room to improve on a disappointing first quarter, which has added to the bearish blow to the stock.
Investors were disappointed in April when Netflix failed to raise its full-year 2026 revenue guidance range from $50.7 billion to $51.7 billion.
The company’s full-year operating margin guidance of 31.5% was below analysts’ estimate of 32% at the time, suggesting that the “breakup fee” profit from the Warner Bros. deal is hiding higher material amortization costs.
And adding to the uncertainty, longtime Chairman Reed Hastings announced he is officially stepping down, marking the end of an era, as the company faces increasing pressure to prove that its advertising business can actually be big.
Goldman Sachs analyst Eric Sheridan wrote in a note, “We view Netflix’s recent earnings report as support for the long-term thesis – compounded revenue growth, expanding margins (while investing in content and platform initiatives) and room to return massive capital (relative to annual free cash flow). “On this last point, when Netflix announced a $25 billion stock repurchase authorization, we viewed it as a positive post-earnings report. Took as. “Compared to these longer theses, the short-term debate will likely hinge on themes around engagement trends and the building blocks (user growth, pricing, etc.) that underpinned the company’s second-quarter revenue commentary.”
Bottom Line: Catching a falling knife is not good in life or investing. Wait for Netflix to show that its growth is going in the right direction and provide more details on its acquisition strategy.
brian sozzi Executive editor of Yahoo Finance and a member of Yahoo Finance’s editorial leadership team. Follow Sozy on X @bryansozzi, InstagramAnd Linkedin. Suggestions on stories? Email broan.sozzi@yahoofinance.com.
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