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Netflix (NFLX) is trading lower following its Q4 earnings report as investors focus on soft near-term guidance despite solid underlying fundamentals. NFLX delivered a slight EPS beat and posted its first-ever $12 bln revenue quarter, with revenue up 17.6% yr/yr, driven by membership growth, higher pricing, and expanding ad revenue.

• Paid memberships surpassed 325 mln globally, with management noting the platform now reaches an audience approaching 1 bln people worldwide.
• Q1 guidance disappointed, with downside EPS and revenue, while FY26 revenue guidance of $50.7-51.7 bln came in roughly in-line with expectations.
• Engagement trends were mixed: total view hours in 2H25 rose 2% yr/yr, accelerating slightly from 1H25, but this masked a decline in non-branded content viewing. Viewing of branded originals increased 9% in 2H25, supported by hits such as the final season of Stranger Things (120 mln views), Nobody Wants This (Season 2), and Selling Sunset (Season 9).
• Advertising momentum remains a key bright spot: ad revenue rose more than 2.5x in 2025 to over $1.5 bln, with expectations to roughly double again to ~$3 bln in 2026.
• Profitability improved as Q4 operating margin came in at 24.5%, above prior guidance of 23.9%. NFLX is targeting a 31.5% operating margin in 2026, up from 29.5% in 2025.
• The proposed Warner Bros. Discovery (WBD) deal is viewed by management as strategically complementary, expanding production capacity and long-term original content investment, with confidence in securing regulatory approvals. Investor sentiment remains cautious given the size and all-cash nature of the WBD acquisition, added leverage, and Netflix's decision to pause share buybacks to help fund the deal.

Briefing.com Analyst Insight:

Netflix's Q4 results showcased the company's ability to generate strong top-line growth, scale advertising meaningfully, and expand margins — all hallmarks of a maturing yet still highly profitable platform. However, the stock is struggling under the weight of multiple near-term headwinds, including soft Q1 guidance, lingering technical weakness since the Q3 gap-down, and investor unease surrounding the massive, debt-funded WBD acquisition. While long-term fundamentals remain intact, the combination of deal risk, paused buybacks, and tempered near-term outlook makes it difficult for the shares to regain momentum quickly. We view the current pullback as understandable and believe investors may remain on the sidelines until execution risk around the acquisition and post-deal financial flexibility becomes clearer.