NFLX Analysis: After a 40% Drawdown, Netflix's Warner Bros. Bid Puts a Streaming Empire at a Crossroads
Netflix Inc. (NASDAQ: NFLX) trades at $82.70 as of February 26, 2026 — down more than 38% from its all-time high of $134.12 set in June 2025. The pullback has compressed the trailing PE ratio to roughly 33x from peaks above 50x, raising a question that rarely applied to the world's dominant streaming platform: Is Netflix a value opportunity? The catalyst for today's volatility is unmistakable. Netflix is locked in a high-stakes bidding war with Paramount-Skydance for Warner Bros. Discovery's assets, and CEO Ted Sarandos is heading to Washington to navigate intensifying antitrust scrutiny. The potential acquisition would be transformative — adding the HBO, CNN, and Warner Bros. Studios libraries to Netflix's already vast content machine — but it also introduces execution risk, regulatory uncertainty, and balance-sheet leverage at a time when the company's organic business is firing on all cylinders. Beneath the M&A noise, the fundamental story is compelling. Netflix generated $45.2 billion in revenue across fiscal 2025, grew operating income at a faster rate than revenue thanks to operating leverage, and produced $9.5 billion in free cash flow — a nearly 500% increase from 2022's $1.6 billion. With 2026 revenue growth guided at roughly 13% at the midpoint, the question for investors is whether the Warner Bros. saga represents an opportunity to buy a world-class business at a discount, or a warning sign that Netflix is overreaching.