Netflix Finally Makes an Acquisition That Wall Street Actually Likes
Key Points
Several sources were confirming that Netflix is buying the Radford Studio Center facility for a fraction of its previous sales price.
Instead of overpaying for third-party content, Netflix is getting a deal on a property that will help it ramp up homegrown content.
The stock has fallen by more than a third over the past year, it's trading at an earnings multiple that's a three-year low.
- 10 stocks we like better than Netflix ›
Netflix (NASDAQ: NFLX) has been jilted at the altar, and the market wasn't impressed -- even after walking away with a hefty consolation prize. Just last week, a report claimed that the leading premium streaming service was outbid for another high-profile property. Netflix refuted the report, claiming that it never made a formal buyout offer.
The narrative has remained the same over the past year. The company behind the popular Love Is Blind matchmaking show is unlucky in love itself. Poor Netflix -- always the Emma, never the bride.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
But it finally seems to have made a love connection.
Image source: Getty Images.
No soup for you
The Los Angeles Times, Bloomberg, and several media trades are reporting that Netflix is under contract to purchase Radford Studio Center in Studio City, California. The production facility has been around since the days of silent films and has since served as the set for several popular shows, including Gunsmoke and Seinfeld.
The deal hasn't been officially announced, but it would be a win for a couple of different reasons. Let's start with the price. The facility sold for $1.85 billion just five years ago. Netflix is getting it for close to $400 million. The purchase also suggests that Netflix will continue to ramp up its original content production, adding to its growing collection of studio properties.
Serenity now
Netflix stock can use the win. The company initially emerged victorious in last year's bid for Warner Bros. Discovery (NASDAQ: WBD). It was eventually outbid for the parent company of HBO and DC Comics, but it did collect a hefty $2.8 billion buyout termination fee.
Investors didn't like it when Netflix won the deal, but the shares have continued to slide even though the company was able to walk away in exchange for enough compensation to buy seven Radfords. Last week, after Roku (NASDAQ: ROKU) announced it was being acquired in a deal initially valued at $22 billion, one report claimed that Netflix had unsuccessfully bid for the leading streaming TV hub. That claim was later retracted.
Not that there's anything wrong with that
A whirlwind of missed connections hasn't served Netflix shareholders well. The stock is now down a brutal 37% over the past year, sinking in a time when bidding wars have broken out for lesser media businesses.
Naturally, the stock hasn't shed more than a third of its value over the past year because of its inability to close a major acquisition. When it did nab a whale -- Warner Bros. Discovery, initially -- the market didn't like that.
Netflix still has a lot to prove. Wall Street critics panned its latest quarter. Results were disappointing on both the top and bottom lines, after adjusting for the after-tax haul from the deal termination fees. Guidance was weak despite its recent increase in subscription prices for its home market. Margins could also be coming under pressure. Founder Reed Hastings' exit from the boardroom also added to the sour market reaction.
But despite the swirling headwinds, Netflix is still posting strong double-digit growth. The platform's popularity continues to grow. And it will also now have more space to dream out loud with the new content production facility.
The shares are also cheaper than they've been in some time. Its trailing and forward P/E ratio is at a three-year low. Looking ahead to next year, Netflix is now trading at 20 times what analysts are projecting for its 2027 earnings.
It shouldn't matter that it was outbid for Warner Bros. Discovery and kicked the tires of Roku before walking away. The Radford deal suggests that Netflix has the resources and industry-leading scalability to drum up more homegrown content that will entertain and captivate the masses. The ultimate acquisition might very well be the shareholders who are buying at today's prices.
Now that's entertainment.
Should you buy stock in Netflix right now?
Before you buy stock in Netflix, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $417,305!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,293,148!*
Now, it’s worth noting Stock Advisor’s total average return is 936% — a market-crushing outperformance compared to 209% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of June 21, 2026.
Rick Munarriz has positions in Netflix and Roku. The Motley Fool has positions in and recommends Netflix, Roku, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
Recommended Articles
