Episode summary
Instant Reaction: Netflix Beats on Earnings, Disappoints on Cautious Forecast | Bloomberg...
Bloomberg Daybreak: US Edition
· · Hosts: Carol Massar, Tim Stenovec · Guests: Chris Palmeri, Eric Clark, Geetha Ranganathan
Summary
Netflix shares fell after the company beat most quarterly expectations but paired that with a cautious outlook. The host and analysts said investors were focused on two pressures: higher programming spending and the cash cost of pursuing the Warner Bros. Discovery studio and streaming assets. The company is planning to raise content spending 10% in 2026, after spending about $18 billion on programming last year, and it paused share buybacks to preserve cash for the pending deal.
The discussion centered on whether Netflix needs Warner Bros. Discovery and whether the bid can clear regulators. The guest argued Netflix is still a strong business even if the deal fails, pointing to pricing power, low churn, and steady subscriber growth. The analyst said the ad business is improving but still not yet a major growth engine, with ad revenue at about $1.5 billion in 2025 and expected to double in 2026. Both guests framed Netflix as a dominant consumer platform that still has room to expand its share of TV time, even as spending rises and the stock gets pressured.
Key takeaways
- The host said Netflix shares fell as much as 5.1% after hours after the company guided first-quarter EPS below expectations and raised spending plans.
- The guest said Netflix has already spent $60 million pursuing Warner Bros. Discovery and expects another $275 million in costs, so it paused buybacks to conserve cash.
- The guest argued Netflix is still attractive even without Warner Bros. because the stock is down more than 30% and the core business is still growing.
- The analyst said Netflix’s ad revenue was about $1.5 billion in 2025 and is expected to double in 2026, but that is still not a huge growth driver yet.
- The analyst said Netflix’s share of U.S. TV time reached 9% in December, leaving room for streaming to take more viewing from linear TV.
Notable quotes
“they largely beat Wall Street estimates, they issued a cautious forecast for the months ahead, setting higher program spending”
“they've spent $60 million already on pursuing Warner Brothers. They're anticipating another $275 million in cost for that”
“the stock's down over 30%. And business is still doing really well”
“they're going to increase prices again this year. Didn't weren't specific”
“they expect to double that going into 2026”
How the episode opens
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Bloomberg Audio Studios podcasts radio news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.
Looking at Netflix shares, they're continuing to move lower. This after the company reported results for the most recent quarter, concerns about the guidance and boosting spending. The company saying for uh even though they largely beat Wall Street estimates, they issued a cautious forecast for the months ahead, setting higher program spending.
And then of course, Carol, the cost of closing its deal with Warner Brothers Discovery.
Number of customers growing by almost eight% last year, topping 325 million subscribers. Let's get um to our team who certainly follows it and of course our own Chris Paul Mary who's been following this company and the ins and outs of the pursuit of Warner Brothers Discovery. Chris there out there on uh the West Coast.
Chris, um you know, you've know this company, you followed it. Uh investors not too impressed. They're worried about I guess it seems like the spend um that's out there, but walk us through what really jumped out for you in their reporting.
Well, first of all, obviously investors have been really concerned about the Warner Brothers bid. The stock has lost a lot of money since the since the, you know, in October when it first came out that Netflix was interested in bidding. And uh you still see concern here. I mean, they said they've spent $60 million already on pursuing Warner Brothers. They're anticipating another $275 million in cost for that.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- netflix earnings
- streaming spending
- cautious guidance
- media acquisition deal
- warner bros discovery
Companies and tickers mentioned
- NFLX
- Netflix
- Warner Bros. Discovery Inc.
- Accuvest Global Advisors
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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