Why I'm Bullish On Netflix With Our Without WarnerBros
"If You Loved NFLX At $1,100, Then You Should Love It Now"
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Netflix (NFLX) shocked the market by winning the $72 billion bid to acquire Warner Bros Discovery (WBD). Shares quickly fell below $100 post-split as investors worried Netflix overpaid for the acquisition.
But I see this as a long-term win. In fact, I opened a position—making NFLX my first non-dividend stock. ‼️
Short-term volatility is likely. But I think if the merger goes through, this positions Netflix for stronger growth over the next decade.
Why the Deal Matters 🤝🏾
Netflix gains:
Warner Bros’ film and TV studios
Iconic franchises like Harry Potter, Game of Thrones, and DC Studios
HBO & HBO Max
Netflix already has 301 million subscribers—nearly triple WBD’s 128 million. Combining Netflix’s global reach with Warner Bros’ content enhances its competitive moat and boosts subscriber potential.
The transaction is expected to close in 12–18 months.
Financial Impact 🏦
Management expects the merger to be:
Accretive by year two
Deliver $2B–$3B in cost synergies by year three
Support future bundle offerings and higher pricing power
Netflix 📽️ is entering this deal from a position of strength:
EPS up 26% YoY
Revenue up to $33.1B
Free cash flow rising to $7.6B
Operating cash flow over $8B
On the other hand, Warner Bros has struggled with declining revenue, shrinking EPS, and subscriber losses. But is important to remember, Netflix is buying high-quality content, not financials.
Risks ⚠️
The biggest risk is regulatory pushback. The deal could be challenged by the DOJ or political pressure from the Trump administration. And until approval is clearer, NFLX will likely remain volatile.
Balance Sheet Considerations ⚖️
Netflix will take on roughly $80B in additional debt, temporarily halting buybacks.
But with:
✅ Only $14.5B of existing debt
✅ Strong cash generation
✅ A $437B+ market cap
✅ $9.2B in cash
…Netflix appears well-positioned. Management expects synergies within two years after the merger.
Upside: With or Without WBD 🎬
Whether the deal closes or not, Netflix remains a high-growth company.
Estimates call for:
20%+ annual growth for the next 3 years
Double-digit growth into 2031
If the merger is approved, I think NFLX could realistically join the trillion-dollar club within 5–10 years.
Conclusion ✅
Despite near-term uncertainty, I believe long-term investors could view volatility as an opportunity.
Netflix’s financial strength, growing cash flows, and strategic positioning make the company attractive even without Warner Bros Discovery. But If the merger succeeds, it supercharges Netflix’s moat and content dominance.
Because of all this, I continue to remain bullish on Netflix. 🎞️
What do you think of the merger?
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Not financial advice. For educational purposes only. I am not a licensed professional. Do your own due diligence.
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