A major development in the stock market is the news that Netflix is buying the assets of Warner Bros. Discovery for $82.7 billion. How might this influence the price of NFLX shares?

To assess the outlook, context is essential.

In the second half of October, a bearish gap appeared on the NFLX chart following a disappointing earnings report. On 24 October, we noted that the price might find support near the lower boundary of the established trend channel. Indeed, the price staged a modest recovery (as shown by arrow 1), but the upper edge of the gap acted as resistance.

In mid-November, Netflix (NFLX) carried out a stock split – traditionally viewed as a bullish signal for retail investors. Splits typically make shares more affordable and often lift prices on expectations of fresh liquidity. However, the share price moved lower instead (as indicated by arrow 2).

As a result:
→ the ascending channel was extended downwards, giving greater prominence to the downward trajectory (marked in red);
→ Netflix shares continued to underperform the broader equity market.

Against this backdrop, the mega-deal to acquire Warner Bros. may raise serious concerns for NFLX shareholders:

→ Dilution effect. To finance the deal, Netflix will issue new shares, which dilutes earnings per share (EPS). Existing shareholders effectively receive a smaller portion of the company’s profits.

→ Financial strain. The vast cost of the acquisition worsens Netflix’s financial metrics, increases debt-servicing expenses, and reduces the overall attractiveness of NFLX shares.

→ Regulatory scrutiny. A Netflix–Warner Bros. merger creates a giant controlling nearly half of the streaming market. President Trump has already suggested it could raise antitrust issues.

Given the above, it is reasonable to assume that rising risks and uncertainty may continue to weigh on Netflix shares – and although the psychological $100 level may act as support, traders should not rule out the possibility that NFLX will continue to move within the downward channel.

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