Netflix stock sinks on Q4 earnings, creating opportunity for long-term investors

Netflix (NASDAQ: NFLX) shares are trending down in after-hours after the streaming behemoth reported its financials for the fourth quarter that only slightly topped Street estimates.

Investors are bailing on NFLX stock primarily because they expected more from the mass media giant given its perceived leadership position in streaming.

In the absence of that, the uncertainty surrounding the company’s $83 billion bid for Warner Bros. Discovery assets is taking the centre stage in after-hours.

Including the initial post-earnings slide, Netflix stock is down some 38% versus its 52-week high.

Is it worth buying Netflix stock on the post-earnings dip?

Netflix saw its revenue climb another 18% on a year-over-year basis to $12.05 billion in the fiscal Q4. Still, its per-share earnings at 56 cents came in a cent above analysts’ expectations only.

On the plus side, however, the Nasdaq-listed firm said it ended the quarter with 325 million global paid subscribers – about 24 million more than a year ago.

Long-term investors should consider loading up on NFLX shares on the post-earnings decline also because the management guided for another 13% increase in revenue for 2026.

This will be “driven by increases in both membership and pricing,” it confirmed in the press release today.

NFLX shares could benefit from ad tier success

Netflix shares remain attractive beyond this near-term volatility also because the streaming giant is seeing massive success with its high-margin advertising tier.

In 2026, the company sees its ad revenue “roughly doubling” on a year-over-year basis, according to its letter to shareholders on Jan. 20.

According to Nielsen, the final season of “Stranger Things” resulted in a 10% increase in NFLX’s monthly viewership in December.

Netflix’s focus on bringing more sports content to its online platform is helping reinforce its lead in the streaming space as well. The Los Gatos-headquartered firm streamed two National Football League games on Christmas.

WBD deal could eventually prove a tailwind for Netflix

Netflix went all-cash in its pursuit of WBD assets on Tuesday, reiterating its commitment to bringing major entertainment franchises like “Game of Thrones”, “Harry Potter”, and DC movies (Batman, Superman etc.) to its viewers.

“Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and offer greater financial certainty,” Ted Sarandos – the co-chief executive of NFLX told investors today.

According to him, the WBD deal will enable its subscribers to enjoy an even broader selection of high-quality quality movies and TV shows.

Meanwhile, the addition of “HBO Max” will see Netflix Inc introduce more personalized, flexible subscription plans as well, Sarandos added.

All in all, while this pending transaction has been an overhang on NFLX stock in recent weeks, it could actually prove a major tailwind if the management succeeds in closing it this year.

Note that Wall Street remains bullish as ever on the streaming giant for the next 12 months. The consensus rating on Netflix sits at “overweight” currently with the mean target of about $125 signaling potential upside of 55% from here.

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