Netflix Inc. is set to report fourth-quarter earnings on Tuesday, offering investors a brief opportunity to assess the streaming company’s core business performance amid intense scrutiny of its $82.7 billion bid for Warner Bros. Discovery Inc.

The earnings report arrives as Netflix shares have fallen 29% since the company’s Oct. 21 third-quarter results, which elevated investor concerns about slowing subscriber growth and the sustainability of the company’s expansion trajectory. The stock decline has unfolded amid Netflix’s aggressive pursuit of Warner Bros., a deal that has sharply divided Wall Street opinion.

Some portfolio managers view the recent selloff as overdone and expect capital to return to Netflix shares regardless of whether the Warner Bros. transaction closes. Others, however, have soured on the stock entirely due to the acquisition dynamics, with some former bulls turning bearish and exiting their positions.

On Tuesday, Netflix enhanced its offer with an all-cash agreement to acquire Warner Bros.’s studio and streaming operations, abandoning its previous cash-and-stock proposal. Netflix shares rose 1% in premarket trading, while Warner Bros. declined 0.3%.

Market Analyst Predictions

Wall Street expects Netflix to report fourth-quarter earnings of 55 cents per share, up 28% year over year, with revenue of $12 billion, up 17% from the fourth quarter of 2024. Despite the expected strong results, analyst projections show revenue growth decelerating in each of the next three quarters before reaccelerating in 2027.

Investment analysts acknowledge that the earnings report is unlikely to shift investor attention away from the Warner Bros. acquisition saga, though it may signal Netflix’s underlying business strength and organic growth opportunities heading into what is expected to be a key year for connected television.

Benchmark Co. maintains a hold rating on Netflix shares but expects the company to deliver solid 2026 guidance for both sales and operating income, which could offer short-term respite from the intense focus on the company’s M&A activities. The firm also cited accelerating international growth and a strategic advertising partnership with Amazon.com Inc. as positive factors.

Content and Subscriber Metrics

Netflix likely posted a solid fourth quarter supported by its blockbuster content lineup, including the finale of science-fiction horror series “Squid Game,” the Jake Paul versus Anthony Joshua boxing match, and NFL games broadcast on Christmas Day. However, any revenue shortfall may aggravate concerns about structural growth limitations, particularly in light of the Warner Bros. transaction.

Given the significant uncertainty surrounding the deal, investors are expected to focus heavily on the company’s guidance, notably about operating margins for 2026, according to TD Cowen. The firm projects paid net subscriber additions of 14.2 million in the quarter, down from approximately 19 million a year earlier but above the consensus estimate of around 11 million.

Deal Uncertainty Continues

The Warner Bros. acquisition process is still uncertain. Last week, Netflix was working on revised terms, including an all-cash structure designed to expedite the sale amid competition from rival bidder Paramount Skydance Corp.

Benchmark analysts contend that Netflix is positioned to benefit regardless of the M&A outcome. A successful combination would create a major player in the streaming marketplace, particularly from pricing and engagement perspectives. Conversely, if Netflix fails to secure Warner Bros., it could satisfy investors who oppose the deal, given the media industry’s poor track record with large acquisitions.

However, some investors view the Warner Bros. bid as excessively expensive and risky for a company that has historically grown organically rather than through acquisitions.

Portfolio managers at First New York, who previously held Netflix in a top position, have turned bearish on the stock due to the deal dynamics, selling their shares and considering short positions if the stock rallies on earnings.

The earnings report will test whether Netflix’s fundamental business performance can offer stability for investors navigating what has become one of the most uncertain periods in the company’s history.