'The worry has become that Netflix is getting desperate to do something big,' an analyst says

By most metrics, Netflix is growing, but its reported interest in M&A has investors worried about the possibility of slower growth ahead.

Netflix may be falling victim to its own success.

Despite reporting earnings that have regularly beaten expectations in recent quarters, the streaming giant's stock price $(NFLX)$ has been in an extended swoon, as investors have signaled wariness over the company's ongoing growth.

Netflix's share price on Monday hit its lowest point in 20 months, with the stock having dropped 32% since the company's last earnings call on April 16. Netflix shares have traded slightly down in the days since.

It's been a roller-coaster ride for Netflix investors over the past 12 months, following the company's aggressive foray into the mergers-and-acquisitions market - namely, its failed effort to acquire Warner Bros. Discovery $(WBD)$ for $82.7 billion after years of saying it preferred to grow from within. That change in attitude alarmed many investors.

"Investors are concerned about Netflix engaging in a large, un-needed acquisition," said Craig Huber, the CEO and managing director of Huber Research. "Some see this as a bad sign in how it reflects Netflix's view of its future growth potential.

"They seem to have gotten the acquisition bug in their heads and that is making investors very nervous," Huber added. "They've been very successful growing organically - why mess with the model?"

The market's squeamishness in response to Netflix's move towards M&A was underscored by a 40% jump in its share price once it abandoned efforts to acquire Warner Bros. Discovery in February after being outbid by Paramount Skydance $(PSKY)$.

That stock bump lasted until the April earnings report, when Netflix's stock slide was triggered by its announcement that co-founder Reed Hastings would be leaving the company. Investors also expressed concerns over Netflix's decision not to raise its growth projections for the year despite reporting revenue and profitability gains that were well above expectations.

Netflix's stock fell further following reports last week that it had bowed out of bidding for Roku $(ROKU)$, which announced that it was being sold to Fox $(FOX)$ $(FOXA)$ for $22 billion. Netflix also denied reports last week that it was pursuing film studio Lionsgate Studios (LION) as a possible acquisition target.

"Investors are seeing signs of Netflix losing ground to YouTube and of slowing engagement, and the worry has become that Netflix is getting desperate to do something big," said Tim Nollen, a media and technology analyst at SSR.

On Monday, Netflix shares fell nearly 6%, which Nollen and Huber attributed to the swirl of reporting suggesting the company was actively looking to make a deal.

A Netflix spokesperson said the reports were nothing more than rumor and speculation, and that the company had not made a bid for Roku or engaged in discussions to acquire Lionsgate.

"We remain more builders than buyers and will always take a disciplined approach towards any M&A," the Netflix spokesperson said. "We are very confident in where our business is at today."

Some analysts say there are broader concerns that Netflix could be entering a period of slower organic growth.

"We continue to believe Netflix benefits from structural advantages given its leading scale and distribution, but we struggle to identify meaningful near-term catalysts that could drive engagement or financial estimates above expectations," Matthew Condon, equity research analyst at Citizens, wrote in a note to clients last week.

Nollen noted that investors also view Netflix's recent interest in investing in higher-cost areas like sports rights, video podcasting and cloud gaming as developments that may weigh on margin growth growing forward.

Netflix's recent stock decline comes amid broader pressure on the S&P 500's communication-services sector XX:SP500.50, which has fallen 11% since hitting a 52-week high in mid-May.

Among the companies that index tracks, Netflix has been among the biggest decliners over the past year, with its shares falling 42% since June 2025.

-Lukas I. Alpert

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June 24, 2026 12:40 ET (16:40 GMT)

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