One of the biggest objections to streaming giant Netflix (NFLX) taking over Warner Bros. Discovery (WBD) is that Netflix is on record, several times, as saying the movie theater is obsolete. Thus, any future releases from Warner will likely end up going straight to Netflix and, probably, creating a self-fulfilling prophecy. But Netflix came out on record against such a play, promising a 45-day window for Warner releases. This gave Netflix shares just a little extra life, a fractional boost going into the closing minutes of Friday’s trading.
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Netflix co-CEO Ted Sarandos recently noted that Warner titles would be hitting theaters, and declared the 45-day theatrical window would be respected. This by itself only meant so much, as we had heard previously that Netflix would be honoring contractual obligations when it came to theatrical releases. Netflix was likely doing this more to avoid lawsuits than it was to protect a platform it regards as obsolete.
But Sarandos raised a point that many others—us included—have raised before. The box office is a massive revenue source. Just look at the sales grosses on any typical Monday and see what theaters pulled in over a weekend. Sarandos made it especially clear: “I want to win opening weekend. I want to win box office.” Indeed, Sarandos also discovered that theatrical business numbers were “…more positive than we had seen and we had modeled for ourselves.” The theater is still a profitable business, and Netflix wants in on that.
Perfect Example, Really
In a display of what might be considered good faith, or a modeling of the plan as a whole, reports note that the live-action Legend of Zelda movie will be making its streaming debut on Netflix. What is more, it will remain there, exclusively. It will go to theaters, and it will also get a “home entertainment release period.” But once those are up, Zelda will be hitting Netflix and staying there for some time to come.
Either way, there will still be quite a wait before this hits. The movie will not hit theaters until May 7, 2027, and will still have to go through the physical and digital purchase runs before hitting the streamer. Still, if anyone wanted proof that Netflix was planning to respect theatrical releases, this might do the job.
Is Netflix Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NFLX stock based on 26 Buys, nine Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 37.03% rally in its share price over the past year, the average NFLX price target of $127.23 per share implies 44.59% upside potential.
