Why Netflix Stock Lost 11% Last Month

Shares of Netflix (NASDAQ: NFLX) fell 11% in January 2026, according to data from S&P Global Market Intelligence. The video-streaming pioneer started sliding in October 2025, as unexpected tax charges met rumor mill whispers about a potential buyout bid for Warner Bros. Discovery (NASDAQ: WBD).

The negative trend continued as Netflix actually launched the rumored Warner Bros. bid in December, followed by an unsolicited rival offer. In January, the Warner Bros. drama dominated Netflix's Wall Street vibe. A solid fourth-quarter report wasn't robust enough to stop the downtrend.

Why Netflix investors can't catch a break

The Warner Bros. deal is a potential game changer. Putting Warner's namesake movie studio and the top-shelf HBO channel together with Netflix's world-class distribution network would reshape Hollywood in many ways. It would also radically alter Netflix's balance sheet, as the company would need to borrow a lot of cash to finance its revised all-cash offer of $82.7 billion.

The bid moved from a cash-plus-stock structure to a pure cash deal in response to Paramount Skydance (NASDAQ: PSKY) issuing a higher all-cash bid of its own. Paramount's offer is technically a hostile takeover bid, where shareholders are asked to reject the negotiated Netflix deal and then replace Warner Bros. Discovery's board of directors with a new slate that supports the Paramount deal.

The drama continues, and Netflix shares keep falling, whether the needle is swinging toward a successful Netflix-Warner merger or a Paramount takeover. A win in Warner's shareholder vote followed by a regulatory block would still be expensive, as Netflix would owe a $5 billion breakup fee in that case.

It's a complicated situation, and investors prefer clarity. The special shareholder meeting doesn't have a date yet, so it's even unclear how much longer the buyout waters will stay murky.

Image source: Netflix.

Is Netflix stock a bargain now?

As of this writing on Feb. 2, Netflix's stock trades 38% below the all-time high it set at the end of June 2025. Valuation ratios look inviting these days, as shares are changing hands at 33 times trailing earnings and 7.7 times sales. Those aren't necessarily deep-discount value ratios, but Netflix is growing its sales at double-digit percentages each year while earnings are soaring more than twice as fast.

I can't promise that the Netflix stock you're buying this week will rise immediately, or next month, or this year. The market doesn't always make sense, there's no telling how Warner Bros. Discovery's shareholder vote will turn out, and my fellow Netflix holders seem unsure whether they want to win this bid or not.

But I can say that these prices should look cheap when you look back at Netflix's 2026 chart in five or 10 years. With or without Warner Bros. Discovery in its pocket, Netflix remains an ambitious entertainment giant with even more audacious long-term plans. From video games and real-world entertainment centers to the Korean hit machine and a flourishing podcast portfolio, Netflix is creating its long-term future with a variety of building blocks.

Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.