Now Streaming: Analysts say buy Netflix on post-earnings weakness

“Now Streaming” is The Fly’s weekly recap of the stories surrounding the biggest content streamers.

PLAYING THIS WEEKEND: Among this weekend’s new streaming content is HBO’s (WBD) supernatural horror TV series “It: Welcome to Derry,” which is based on the Stephen King novel “It.” Also available to stream this weekend is political thriller film “A House of Dynamite,” directed by Kathryn Bigelow and starring Idris Elba and Rebecca Ferguson. The film makes its global streaming debut on Netflix (NFLX) on October 24. Additionally, Hulu (DIS) subscribers can catch American thriller film “The Hand That Rocks the Cradle,” a loose remake of the 1992 film of the same name.

NETFLIX EARNINGS: Earlier this week, Netflix reported downbeat Q3 results, with earnings falling below consensus estimates. The company noted that while Q3 revenue grew 17%, in-line with its internal forecast, operating margin of 28% was below its 31.5% target due to an expense related to an ongoing dispute with Brazilian tax authorities that was not in the company’s forecast. “Absent this expense, we would have exceeded our Q3’25 operating margin forecast,” Netflix said. “We don’t expect this matter to have a material impact on future results. Engagement remains healthy. We hit our highest quarterly view share ever in the US and UK, which has grown 15% and 22%, respectively since Q4’22, according to Nielsen and Barb.”

Looking ahead, Netflix provided upbeat Q4 guidance and revised its FY25 revenue target to $45.1B from $44.8B-$45.2B. On its quarterly call, the company said it was refraining from providing any guidance for 2026, though it sees “plenty of room for growth” in ads.

The shares fell following the report, and multiple securities analysts lowered their price targets. That said, Evercore ISI said it would be a buyer on the dip, saying the revenue miss was “rare” and “very modest.” Needham and Argus also released notes calling the selloff a buying opportunity, though Wedbush, which cut its price target on Netflix to $1,400 from $1,500, said the Q4 guidance “underwhelmed” investors.

WARNER BROS. DISCOVERY: On Tuesday, Warner Bros. Discovery said its board of directors has initiated a review of strategic alternatives to maximize shareholder value, in light of unsolicited interest the company has received from multiple parties for both the entire company and Warner Bros. Through this process, the Warner Bros. Discovery Board will evaluate a broad range of strategic options, which will include continuing to advance the Company’s planned separation to completion by mid-2026, a transaction for the entire company, or separate transactions for its Warner Bros. and/or Discovery Global businesses. As part of the review, the company will also consider an alternative separation structure that would enable a merger of Warner Bros. and spin-off of Discovery Global to our shareholders.

“We continue to make important strides to position our business to succeed in today’s evolving media landscape by advancing our strategic initiatives, returning our studios to industry leadership, and scaling HBO Max globally. We took the bold step of preparing to separate the company into two distinct, leading media companies, Warner Bros. and Discovery Global, because we strongly believed this was the best path forward,” said David Zaslav, President and CEO of Warner Bros. Discovery. Zaslav added, “It’s no surprise that the significant value of our portfolio is receiving increased recognition by others in the market. After receiving interest from multiple parties, we have initiated a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets.”

Following the statement, CNBC’s Alex Sherman reported that the company had already rejected several bids from Paramount Skydance (PSKY), with CNBC’s David Faber reporting that Comcast (CMCSA) and Netflix were interested in a Warner Bros. Discovery deal. The Fly notes that Netflix said on its quarterly call that it has “no interest” in owning legacy media networks.

Later in the week, the Wall Street Journal’s Joe Flint reported that Warner Bros. Discovery dismissed three offers from competitor Paramount Skydance, including one that provided its CEO, David Zaslav, a position in leading the combined company. Paramount CEO David Ellison sent a letter to the Warner Bros. board offering Zaslav to stay on as co-CEO and co-chairman, according to the report.

That same day, the company’s HBO Max said its HBO Max Basic with Ads, Standard, and Premium plan prices are increasing. Basic with Ads is going up to $10.99 from $9.99 a month, with the yearly plan going to $109.99 per year from $99.99; Standard monthly is going up to $18.49 per month from $16.99, with Yearly up to $184.99 from $169.99; and Premium monthly is going up to $22.99 per month from $20.99, with Yearly up to $229.99 from $209.99.

PARAMOUNT LAYOFFS: Paramount Skydance employees will face a new round of cuts, with the company expecting to eliminate around 2,000 jobs in the U.S., with additional layoffs internationally, Todd Spangler of The Variety reported last weekend. The company originally expected to begin the layoffs by early November but now will begin the week of October 27.

DISNEY/YOUTUBE: In a statement on its help page, YouTube TV (GOOGL) said, “In order to provide you with the best in live sports and entertainment, YouTube TV enters into partnerships with content providers like Disney. Each time we renew our contracts with these partners, we advocate for fair pricing and greater flexibility to offer our subscribers the best possible live TV experience. Our current agreement with Disney is approaching its renewal date, and we will not agree to terms that disadvantage our members while benefiting Disney’s own live TV products. If we’re unable to reach a fair deal by Thursday, October 30, their content, including channels like ABC, ESPN, and any library recordings from these networks, will be removed from YouTube TV. We’re committed to continuing to work with Disney to reach an agreement, but if their content becomes unavailable for an extended period of time, we’ll offer our subscribers a $20 credit.”

STOCK PLAYS: Other publicly traded companies in the space include Apple (AAPL), Amazon (AMZN), FuboTV (FUBO), Fox (FOXA), Roku (ROKU), and AMC Networks (AMCX).