As we gear up for Netflix’s earnings update this Tuesday, the conversation has shifted from “how many people are watching” to “how much are they paying?” For the average viewer, this report is a window into the future of their living room. With Netflix stock hovering around $90, the company is trying to become the one-stop shop for everything you watch. But after news that Netflix is trying to acquire Warner Bros, investors are looking for proof that the streaming giant can maintain its double-digit growth while navigating its most ambitious acquisition to date.
If you’ve noticed more commercials while binging your favorite shows, you aren’t alone. Netflix now has over 94 million people on its ad-supported plan. For consumers, this has been a way to keep monthly costs down, but for Netflix, it’s a goldmine. With roughly 94 million users on the ad plan, revenue is expected to scale fast enough to offset the natural slowdown in US subscriber growth. The big question this week is whether the success of the ad-supported plan will delay another price hike for the Premium tier.
Wall Street is looking for revenue of roughly $11.97 billion (up nearly 17% year-over-year) and earnings per share of $0.55. The elephant in the room is Netflix’s proposed $82.7 billion acquisition of Warner Bros. Discovery’s studio and streaming assets (including HBO and Max).
This deal, announced in December, represents a total shift in Netflix’s DNA. By moving from a software-first model to owning massive studio assets in one of the world’s most iconic “content factories,” Netflix is betting on the old business model. Analysts are worried about the debt load and the potential “distraction risk” as Netflix tries to integrate a legacy media titan.
However, for HBO fans, the deal will not change much. Netflix is not planning to create a content superplatform just yet. Following the acquisition, the platforms would remain separate.
The acquisition raises the question of whether Netflix is not making the mistake of buying an overlapping audience, that is, people who already subscribe to both platforms. Merging the platforms could actually destroy value for the company. The company says that’s not the case, but it hangs as a dark cloud over this acquisition.
With Paramount also trying to jump into the deal with a $108 billion rival bid, the “streaming wars” are entering a chaotic new chapter. For viewers, a consolidation could be uncertain. Will you get double the price for double the content, or keep your separate subscriptions? And what will it do to competition? All of those questions are being asked by regulators at the moment.
Netflix’s business is maturing, and its no longer just a growth stock disruptingdistributing the TV world. The combination of its superior tech stack and HBO’s premium content library could create an unbeatable moat. But in the short term, the market is sensitive to execution risks. And it doesn’t only affect investors. If the WBD deal gets too expensive, the pressure to raise subscription fees in 2026 will only increase.
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