NFLX Stock In Focus Amid Reports It Could Change WBD Offer To An All-Cash Bid: Retail Says It's A Signal Of Organic Growth Becoming Expensive

Netflix is said to have discussed making its offer all cash for Warner Bros’ studios and streaming businesses.

• In its announcement, Netflix stated that the deal with Warner Bros. Discovery will bring the streaming giant’s technology prowess and WBD’s century-long legacy of storytelling.
• In essence, this gives Netflix’s library a massive boost, with franchises such as Harry Potter, Game of Thrones, Friends, The Big Bang Theory, and the DC Universe, among other movies and shows.
• In a letter to shareholders earlier this month, WBD’s board of directors urged them not to vote in favor of Paramount’s offer.

Netflix Inc. (NFLX) shares gained more than 3% in Wednesday’s pre-market trade before shedding some of the gains to hover 2% lower in the regular session.

This comes amid reports of Netflix amending its offer for Warner Bros. Discovery Inc. (WBD), following a hostile bid from Paramount Skydance Corp. (PSKY) for WBD.

Retail sentiment on Stocktwits around Netflix trended in the ‘extremely bullish’ territory at the time of writing.

Netflix And Paramount’s Offers Compared

Netflix’s offer ascribes an enterprise value of $82.7 billion for WBD, but excludes the spinoff company. However, according to a report on Tuesday, Netflix is said to have discussed making its offer all cash for Warner Bros’ studios and streaming businesses.

In contrast, Paramount’s offer values Warner Bros. Discovery at $108.4 billion, including the company’s debt, as well as cable TV networks such as CNN, the Discovery Channel, and TNT.

Why Is Netflix Pursuing Warner Bros?

In its announcement, Netflix stated that the deal with Warner Bros. Discovery will bring the streaming giant’s technology prowess and WBD’s century-long legacy of storytelling.

In essence, this gives Netflix’s library a massive boost, with franchises such as Harry Potter, Game of Thrones, Friends, The Big Bang Theory, and the DC Universe, among other movies and shows.

Paramount Questions WBD Board

Paramount questioned the board of Warner Bros. Discovery for choosing Netflix’s offer, noting that its deal is easy to value when compared to the Netflix transaction.

The David Ellison-led company filed a suit in the Delaware Chancery Court, asking it to direct Warner Bros. Discovery to provide information with respect to Netflix’s offer.

While announcing its hostile bid in December, Paramount highlighted that it provides WBD shareholders $18 billion more in cash than the consideration offered by Netflix.

WBD Board Urges Investors Not To Vote In Paramount’s Favor

In a letter to shareholders earlier this month, WBD’s board of directors urged them not to vote in favor of Paramount’s offer.

“PSKY’s offer has significant risks and is inferior to the Netflix merger on a risk-adjusted basis,” the board said, stating that the Netflix deal is more favorable.

The WBD board also called Paramount’s offer “illusory,” adding that it cannot be completed before its current expiration date. It also said that Paramount’s offer is “effectively a one-sided” option for the David Ellison-led company, as it can be terminated or amended at any time by PSKY.

NFLX Stock’s Performance Since Offer Announcement

Since announcing the deal with Warner Bros. Discovery on December 5, the NFLX stock has trended downward, declining more than 11% till date.

In contrast, the WBD stock has gained a shade over 11% during the same period. PSKY stock has declined over 9% in this timeframe.

Here’s How Stocktwits Users Reacted

One user on Stocktwits called the Netflix-WBD deal a strategic shift, while noting that this is “a signal of how expensive organic growth has become.”

One bullish user stated that “scared money will never make money,” as the NFLX stock lost its pre-market gains.

NFLX stock is down 4% year-to-date, but up 9% over the past 12 months.

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