Netflix Stock Climbs as Investors Cheer Warner Bros. Exit

Netflix, Inc. (NFLX) shares are surging in pre-market trading on February 27, 2026, climbing to $90.42, a gain of $5.81 or 6.87%, as investors enthusiastically welcomed the company’s decision to walk away from its bid to acquire Warner Bros. Discovery Inc. The pre-market jump follows an already dramatic after-hours move of up to 13% on Thursday evening, when Netflix officially announced it would not match Paramount Skydance Corp.’s revised $111 billion takeover offer for Warner Bros., with co-CEOs Ted Sarandos and Greg Peters calling the deal “no longer financially attractive” at the price required to compete.

The market’s reaction reflects a broad sense of relief that Netflix will avoid taking on more than $50 billion in new debt and sidestep the operational complexities of becoming a legacy Hollywood studio. In place of the acquisition, Netflix will collect a $2.8 billion breakup fee and redirect its focus toward share repurchases and its $20 billion content budget for the year.

Netflix Just Won by Losing

From the moment Netflix’s interest in Warner Bros. Discovery became public, shareholders expressed deep reservations about the deal. The stock shed roughly 40% of its value over the five months following the initial reports, as investors feared the company was straying from the disciplined, builder-first model that had made it the dominant force in streaming.

Critics worried Netflix would take on more than $50 billion in new debt to become just another legacy Hollywood studio, complete with theatrical release obligations and the need to sell content to rival platforms, both concessions Netflix had already agreed to as part of the Warner Bros. deal terms. The relief that flooded the market upon the exit announcement was immediate and unmistakable, with shares rebounding sharply in after-hours trading.

Beyond the stock reaction, the strategic logic of walking away appears sound. Netflix had already signaled its preference for organic growth, with co-CEO Greg Peters telling Bloomberg’s Screentime conference as recently as October that investors should be skeptical of large media mergers, which historically have a poor track record.

By stepping back, Netflix avoids the cultural and operational complexity of integrating a sprawling legacy media company, and instead gets to deploy the $2.8 billion breakup fee toward content, sports rights, or further licensing deals – areas where analysts at MoffettNathanson Research say Netflix has a natural edge. Raymond James analysts noted that share repurchases are likely to be the primary use of the freed-up capital, though they did not rule out other strategic options given Netflix’s newfound taste for M&A.

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NFLX Stock Brief: Price and Performance Update

As of the close on February 26, NFLX finished the regular session at $84.59, up $1.88 or 2.28% on the day, against a previous close of $82.71. In pre-market trading on February 27 at 4:58 AM EST, the stock was quoted at $90.42, a further gain of $5.81 or 6.87%, reflecting the after-hours surge following the Warner Bros. withdrawal announcement.

The day’s regular session range ran from $82.82 to $86.50, with volume of approximately 69.3 million shares against an average of 47.3 million, pointing to significantly elevated investor activity. The company’s current market capitalization stands at approximately $358.8 billion, with a P/E ratio of 33.43 and EPS of $2.53 on a trailing twelve-month basis.

Despite the positive session, NFLX has faced headwinds in recent months, posting a year-to-date return of -9.78% and a one-year return of -14.56% as of February 26, underperforming the S&P 500’s respective gains of +0.93% and +16.00% over the same periods. Much of that underperformance is attributable to the uncertainty surrounding the Warner Bros. bid, which weighed heavily on sentiment since the deal first surfaced.

Over a three-year horizon, however, Netflix remains a standout performer with a return of +166.72%, more than doubling the index’s +74.02% gain. The analyst consensus remains firmly bullish, with an average 12-month price target of $111.81, roughly 32% above the current trading price, and the majority of covering analysts maintaining Buy or Strong Buy ratings.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.