In the words of Nicole Kidman, alone in a multiplex, "somehow, heartbreak feels good in a place like this."
Netflix (NFLX +0.12%) officially bowed out of the battle for Warner Bros. Discovery (WBD 0.81%) late last week. Paramount Skydance (PSKY 0.96%) raised its hostile bid for the parent company of HBO, and Netflix conceded that the price was too rich for its blood. Both the winning and losing bidder soared on Friday. You don't see that very often.
If you're a subscriber to several of these streaming services, this probably isn't good news. Netflix could've used its scalability to lower prices, or at least bundle the premium offerings at a discount. Paramount Skydance could also take the same path, but given its expanding debt and the combined company's struggles with digital profitability, it might not have the same wiggle room. Is anyone actually paying for Paramount+ with all of the free offers available?
Image source: Getty Images.
The stock chart doesn't lie
As one of Netflix's longest-running retail investors -- having owned my piece since the fall of 2002, when it was a broken IPO -- I couldn't be happier. The market action on Netflix over the past few months says it all.
Going back to when Netflix first entered the bidding war for Warner Bros. Discovery, weeks ahead of its early December $72 billion deal (or $83 billion once accounting for the assumed debt), Netflix stock fell by more than $100 billion in market cap at one point. In short, the market thought that the combined entity was worth less than Netflix on its own.
Over the past four trading days of last week, bullish momentum returned. Paramount Skydance drummed up a superior offer. Netflix threw in the towel. Netflix found victory in defeat.
In the last 4 trading days, $NFLX is up $20.22 -- or $85 billion in market cap (4.2 billion shares outstanding). It has increased in value more than what it was willing to pay for $WBD. Think about that. #Netflix #NetflixStock
-- Rick Munarriz (@Market) February 28, 2026
In less than a week, the market has warmed up to Netflix as a swinging single. Netflix is now worth more on its own than it was a week ago, when it was the one wearing the Warner Bros. Discovery engagement ring. Throw in the $2.8 billion it's now collecting from Warner Bros. Discovery for terminating the deal, and it's a cherry on the sundae.
NASDAQ: NFLX
Key Data Points
Investors are rewarding discipline
Warner Bros. Discovery's studio and content assets would've looked great under Netflix's arm. No one comes close to generating its $45 billion in annual revenue on 325 million paying subscribers worldwide. Who needs Game of Thrones when you're already the kingmaker of content?
The class act of media stocks would've become even bigger, but at what cost? Netflix was already starting to get politicized as the winning bidder, and that's before considering the regulatory hurdles it would have to clear to bring it all together.
Losing out on Warner Bros. Discovery -- and getting Paramount Skydance to overpay -- is the best outcome. It will make it that much easier for Netflix to make a play for a smaller content deal after seeing Skydance score back-to-back deals. Hopefully, Netflix has also learned that it doesn't need to make any deal at all to make the market happy.
Netflix was doing just fine on its own. Revenue growth has accelerated for the third consecutive year. Stickiness is improving, and it can keep bidding for live sports deals without ruffling feathers or attracting regulatory scrutiny. It will remain the ideal landing spot for any new piece of content that becomes available. The stock's 27% surge over the last four trading days isn't a consolation prize. It's an affirmation that sometimes you win more by losing.
