Shares of Netflix (NFLX 0.07%) rose 15.3% in February 2026, according to data from S&P Global Market Intelligence. It wasn't a smooth ride to the top, but a bumpy road with 9.1% price drops twice along the way. And then, the video-streaming pioneer closed out the month with a 26.6% run in the last five days.
You see, Netflix dodged a massive albatross in the last week of February (I take my metaphors shaken, not stirred). It looks like Paramount Bluesky (PSKY 0.85%) will acquire Warner Bros. Discovery (WBD 0.76%), because Netflix has officially canceled its $83 billion bid for the target company's content studio and streaming services.
NASDAQ: NFLX
Key Data Points
Why investors hated the pending Warner Bros. deal
You can call it a lost opportunity, but investors had dropped Netflix's stock price more than 40% below last summer's all-time peak for a reason. Assuming Netflix had won Warner Bros. Discovery's shareholder vote and passed the regulatory reviews, the company would have taken on more than $70 billion of new debt to finance its all-cash offer.
That's a lot for a company with $9 billion of cash reserves and $13.5 billion in long-term debt at the end of 2025. Multiplying the debt load by 5 or 6 is a risky idea, even if the deal brings game-changing movie studio assets to the table.
So Wall Street breathed a long sigh of relief when Paramount raised its offer, and Netflix declined to continue its bidding. That enormous debt load will forever remain an academic thought experiment, not a financial reality with crushing interest payments.
Image source: The Motley Fool.
Netflix's plan B looks pretty good
So what comes next for Netflix? The company dodged a debt bomb, but it still faces the same competitive pressures that made the Warner Bros. Discovery deal tempting in the first place. Disney, Amazon, and Apple aren't slowing down their content spending. The revamped Paramount -- assuming that the alternative deal closes -- must squeeze value out of the expensive Warner Bros. deal. Netflix needs a plan beyond "not acquiring Warner Bros. Discovery."
Luckily, the company has options. The ad-supported tier is growing nicely. Live events and sports coverage are bringing in new eyeballs. Podcasts are rapidly becoming a serious content category, and I'm still waiting for Netflix's video games to start making money.
Plus, management gets to keep its weekends free instead of spending them on antitrust depositions.
The stock remains well below its 2025 peak, so there's room to run if Netflix delivers solid earnings in April and beyond. In the meantime, you can pick up shares of this stellar growth stock at an unusually low valuation. 39 times earnings isn't exactly a fire sale, but everything is relative. Netflix's P/E ratio is still a huge drop from last summer's 62.5x.
