Should You Buy Netflix Stock Before Jan. 20?
Key Points
Netflix stock has struggled over the past six months.
Investors are now focused on the company's proposed acquisition of certain assets from Warner Bros. Discovery.
The acquisition faces challenges on multiple fronts.
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The streaming giant Netflix (NASDAQ: NFLX) will announce earnings results from its fourth quarter of 2025 on Tuesday, Jan. 20, after the market closes. Earnings can be a catalyst if a company produces strong results ahead of Wall Street consensus estimates or announces some kind of strong future financial guidance that is better than the market had expected.
Image source: Netflix.
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Wall Street consensus estimates are calling for Netflix to report $0.55 earnings per share, which would be 28% higher on a year-over-year basis. Meanwhile, revenue is projected to increase by 17% year over year to $11.97 billion. Should you buy Netflix before Jan. 20?
Investors are not focused on earnings right now
Coming into this earnings season, I think investors are less focused on earnings and more on Netflix's pending acquisition of Warner Bros. Discovery's (NASDAQ: WBD) film and television studios, including HBO. Netflix has proposed to acquire these assets for an enterprise value of nearly $83 billion. However, the process has been contentious, as Paramount Skydance (NASDAQ: PSKY) has mounted a hostile bid to acquire all of Warner Bros.
While Warner Bros. elected to go with Netflix's offer, Paramount is now suing Warner Bros., and also said it plans to nominate members to the company's board of directors and wage a proxy battle. For the time being, investors will be focused on how all of this drama unfolds. Additionally, Netflix may face challenges obtaining regulatory approval.
I wouldn't recommend that investors buy Netflix for a near-term earnings bump. However, I think longer-term investors should give the stock real consideration as its price has declined by over 28% in the past six months. Netflix remains a leader in the streaming space, and successfully acquiring HBO would likely take it to the next level.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
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