Why Netflix (NFLX) Stock Is Falling Today

What Happened?

Shares of streaming video giant Netflix (NASDAQ: NFLX) fell 4.5% in the afternoon session after it posted fourth-quarter earnings that exceeded Wall Street's sales target, as it surpassed 325 million subscribers; however, management acknowledged that increased content spending and integration costs from the pending Warner Bros. acquisition could pressure margins in the coming fiscal year. 

The company also paused its buyback program to better prepare for the bid on Warner Bros. Discovery's studio assets. This pivot, was likely designed to fend off a rival bid from Paramount Skydance. 

Overall, the market's reaction suggests the updates raised additional concerns, creating uncertainty. It also overshadowed the positive aspects of the quarter, including improved subscriber momentum and the advertising business which grew more than two-fold in 2025, and was projected to double again in 2026.

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What Is The Market Telling Us

Netflix’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 12 months ago when the stock gained 15.4% on the news that the company reported impressive fourth-quarter results, which blew past analysts' global streaming paid memberships expectations, with a strong net add figure (18.9 million vs. estimates of 9.8 million). 

This led to a revenue and EPS beat in the quarter. Additionally, revenue guidance for 2025 beat expectations, and the company spoke optimistically about multiple vectors such as ad revenue, live events, and new content. Netflix's decision to increase pricing on certain subscription plans also reflects management's confidence in its content's quality and suggests potential benefits for both sales and profitability. Overall, this quarter was strong. 

Following the strong performance, Barclays upgraded the stock's rating from Sell to Hold, adding, "The company's continued outperformance largely disproves our hypothesis on growth mean reversion and while growth will slow in '25, current operating momentum if sustained, could drive further upside.".

Netflix is down 8.3% since the beginning of the year, and at $83.41 per share, it is trading 37.7% below its 52-week high of $133.91 from June 2025. Investors who bought $1,000 worth of Netflix’s shares 5 years ago would now be looking at an investment worth $1,438.

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