By Angela Palumbo
Netflix stock can bounce back from the pressure it was under during the bidding war for Warner Bros. Discovery, but increased content investments and competition mean investors should wait on the sidelines for now, says a Wells Fargo analyst.
Shares of Netflix were down on Monday after Steven Cahall resumed coverage of the stock with an Equal Weight rating and $105 price target. Cahall previously had an Overweight rating and $151 price target on the shares.
"Now that the WBD saga has ended, we think the scars on NFLX's stock can begin to heal," Cahall wrote in a research note. However, Cahall also thinks the stock should now be trading at a lower multiple following a recent selloff and the company's plans to increase content investments.
Netflix was at the center of a major bidding war with Paramount Skydance over the past several months. The company responsible for Stranger Things and Bridgerton announced in December that it had reached a deal to buy the film and TV studio assets of Warner Bros. for about $83 billion, including debt. Paramount was offering to buy Warner Bros. for $30 a share.
Shareholders weren't thrilled with the deal. Netflix stock hit a 52 week closing low of $75.86 on Feb. 12, 2026. While shares have started to bounce back, the stock has still fallen 27% from its all-time closing high of $133.91 hit on June 30, 2025.
But the stock jumped 14% on Feb. 27 after Paramount raised its offer for Warner Bros. to $31 a share and, in response, Netflix walked away from the bidding war.
Netflix investors want the company to focus on its own growth from the inside out. That's exactly what Netflix seems intent on doing now. The company said in the press release on Feb. 26 that it would invest approximately $20 billion in its own content and "expand our entertainment offering."
"Following the decision to walk away from the WBD bidding process, NFLX strategy reverts back to 'business as usual,'" BofA Securities analyst Jessica Reif Ehrlich wrote in a note on Friday. "In practical terms this suggests focus on organic growth, investing in content driving growth in both engagement and their relatively new ad business."
Cahall believes Netflix will keep investments elevated for a while. Because of that, and increased competition as Paramount and Warner Bros. look to combine, Cahall expects Netflix "to trade at a slight discount."
Netflix trades at 29.93 times earnings expected over the next 12 months. While that's below its five-year average of 33.9 times, its at the high end of Cahall's expectations of a 25 times to 30 times forward earnings multiple for the stock.
Shares of Netflix were down 1.6% to $97.36 on Monday.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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(END) Dow Jones Newswires
March 09, 2026 15:12 ET (19:12 GMT)
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