Netflix Stock Dropped 8% Last Month -- Here's What Happened

Many sectors started the year by tumbling on fears of runaway spending on data centers and artificial intelligence (AI) shaking up entire industries.

Netflix (NASDAQ: NFLX) shares also fell in January, but its 8% decline stems from a completely different set of concerns.

Instead, Netflix shareholders are grappling with their own flavor of uncertainty and risk.

Image source: Getty Images.

The separation that started it all

The January drop ties back to the opportunity for Netflix to acquire assets from Warner Bros. Discovery (NASDAQ: WBD), a path Warner forged years ago. Poor stock performance, heavy debt, and weakening content revenue pushed Warner to originally pursue a significant restructuring.

In June 2025, Warner announced plans to separate itself into two publicly traded companies, Streaming and Studios, and Global Networks, to "maximize its potential." The Streaming and Studios division would house Warner Bros.' film and TV studios, HBO and HBO Max, DC Studios, and the company's major content libraries. Global Networks would include CNN, TNT Sports, Discovery, and digital brands like Discovery+ and Bleacher Report.

That plan took a turn on Oct. 21, 2025, when Warner Bros announced it was exploring asset sales and alternatives.

Speculation soon swirled around potential suitors, with Netflix, Paramount Skydance, and Comcast considered early contenders.

Anxiety for Netflix shareholders

Netflix put an end to the speculation on Dec. 5, 2025. It announced a definitive agreement to acquire assets from Warner, including HBO and HBO Max, in a cash‑and‑stock transaction valued at $27.75 per share.

Three days later, Paramount stepped in with an all‑cash tender offer of $30 per share for the entirety of Warner Bros. Discovery. Netflix amended its offer to an all‑cash structure on Jan. 20, while maintaining the $27.75 per share value. The total deal is valued at nearly $83 billion.

So where do things stand?

For Paramount, it announced an amended bid on Feb. 10, committing to cover a $2.8 billion termination fee Warner would owe Netflix if it switched deals.

At the same time, Netflix's offer continues moving through its own approval process. It expects a WBD shareholder vote to approve the offer by April 2026. With regulatory filings underway in the U.S. and Europe, Netflix also projects the deal will close within 12 to 18 months of the original agreement.

All of that sets up a long, unpredictable road for Netflix.

More uncertainty is headed Netflix investors' way

The deal would give Netflix a treasure trove of intellectual property (IP), including heavy hitters like the Harry Potter franchise and various Game of Thrones assets.

I believe Netflix can ultimately harness those assets into meaningful profits, but it will likely take years before the estimated $50 billion to $61 billion in associated debt obligations from the deal are fully justified. There's also a real risk that the acquisition becomes a money pit that's difficult for the company to climb out of.

If the deal isn't approved, shareholders may cheer in the short term as Netflix saves billions of dollars and can look for other, less expensive content opportunities.

A finalized deal will determine the stock's next move, but this looks like a prolonged battle.

Expect choppy trading in the meantime.

Jack Delaney 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 recommends Comcast. The Motley Fool has a disclosure policy.