Is Now the Time to Buy Netflix Ahead of Earnings Amid $83B WBD Acquisition Uncertainty?

The question of whether to buy Netflix (NASDAQ:NFLX) ahead of its Q4 2025 earnings report hinges on a delicate balance between the company's operational resilience and the looming uncertainty of its proposed $83 billion acquisition of Warner Bros. Discovery (WBD). With the stock down 28% since its third-quarter report and trading at $88.05 as of December 2025, investors are weighing the risks of M&A overhangs against the potential for earnings-driven rebounds and long-term strategic gains. This analysis evaluates the case for a strategic entry point, factoring in technical indicators, analyst projections, and the evolving dynamics of the WBD acquisition.

Earnings Momentum and Operational Strength

Netflix's Q4 2025 earnings report, scheduled for January 21, 2026, will be a critical inflection point. Analysts project revenue of $11.9 billion, reflecting 3.5% year-over-year growth, though operating margin expectations have been revised downward to 23.9% from 31.5%. This discrepancy highlights concerns about cost pressures, particularly as the company invests in original content and digital ad expansion. However, Q3 results demonstrated strong engagement and retention metrics, suggesting a solid foundation for Q4 performance. If Netflix meets or exceeds these expectations, the stock could see a short-term bounce, especially given its current oversold technical profile.

M&A Uncertainty: Strategic Risks and Rewards

The WBD acquisition remains a double-edged sword. While the WBD board has unanimously endorsed Netflix's $23.25-per-share offer (cash plus Netflix stock) over Paramount Skydance's $30-per-share all-cash bid, legal and regulatory battles persist. Paramount's aggressive tactics-including lawsuits and director nominations- introduce execution risks, while Netflix's $83 billion debt-laden bid raises concerns about leverage and integration complexity. Analysts like Wedbush and Goldman Sachs have lowered price targets to $115 and $112, respectively, citing these uncertainties. Conversely, HSBC's initiation of a "Buy" rating with a $107 target underscores the potential for undervaluation amid the 33% decline since mid-2025. The acquisition's outcome could either catalyze a re-rating of Netflix's stock or deepen its volatility, depending on regulatory approvals and shareholder votes.

Technical and Valuation Insights

From a technical perspective, NFLX is trading near key support at $89.41, with RSI at 24.1 (oversold) and a bullish MACD crossover suggesting waning downside momentum. The 50-day moving average ($95.1) remains below the 200-day ($112.8), signaling a bearish trend. However, the average analyst price target of $127.91 implies a 45% upside from current levels, with BMO Capital and TD Cowen projecting $143 and $115, respectively. Valuation metrics, including a historically low P/E ratio, further suggest the stock is attractively priced for long-term investors willing to navigate short-term volatility.

Scenario-Based Entry Points

The decision to buy NFLX hinges on three scenarios:
1. Earnings Outperformance: A strong Q4 report could trigger a rebound toward $126.33 resistance, particularly if ad revenue growth and content performance exceed expectations.
2. M&A Resolution: A finalized WBD deal, even if delayed, might unlock value through synergies in global content libraries and advertising. However, regulatory hurdles or a failed acquisition could prolong uncertainty.
3. Continued Volatility: If the stock remains range-bound, investors could use the oversold RSI and declining volume to accumulate shares at a discount, targeting a breakout above the 200-day MA.

Conclusion: A Calculated Bet

While the WBD acquisition introduces near-term risks, Netflix's operational strengths-strong content pipeline, digital ad adoption, and resilient subscriber metrics-justify a strategic entry. The current price of $88.05 sits below analyst price targets and key technical support levels, offering a margin of safety for patient investors. However, the decision to buy should be tempered by a clear risk management plan, given the stock's elevated implied volatility (45%) and debt-related execution risks. For those with a medium-term horizon, the combination of undervaluation, earnings momentum, and potential M&A catalysts makes NFLX a compelling, albeit volatile, opportunity.