US Stock Market Move | Q1 performance guidance falls below expectations - Netflix (NFLX.US) drops more than 7% in pre-market trading.

On Wednesday, Netflix (NFLX.US) fell more than 7% in pre-market trading, closing at $80.89. On the news front, Netflix announced its fourth-quarter performance, which slightly exceeded Wall Street expectations; however, they are more cautious about future performance over the next few months due to increased program expenses and the costs associated with completing the deal with Warner Bros. Discovery channel (WBD.US). Q4 revenue was $12.1 billion (an 18% year-over-year increase) with earnings per share of $0.56, both beating analyst expectations. They project full-year revenue for 2025 to reach $45.2 billion, a 16% increase from the previous year. Looking ahead, Netflix expects Q1 earnings per share to be $0.76, below Wall Street's expectation of $0.82; Q1 revenue is estimated to be $12.2 billion, in line with expectations. Netflix hinted that revenue growth over the next year may slow down, projecting a 12%-14% increase in full-year revenue for 2026, reaching $50.7 billion to $51.7 billion, slightly below the earlier target of around 15%, with analyst expectations at $50.98 billion. Additionally, on Tuesday, the company announced a revised agreement to acquire Warner Bros. and HBO for all-cash, purchasing these departments at $27.75 per share in cash, as opposed to the previous offer of cash plus stocks. Seeking Alpha analyst Julian Lin said, "I suspect the post-earnings weakness in the stock is the result of several factors, including the stock being overvalued before the earnings release, management's expectations for margin expansion being pushed further back (increasing execution risk), and uncertainty related to the Warner Bros. acquisition."