Netflix shares slide as revenue growth shows signs of stalling

Netflix shares fell more than five percent on Tuesday after the streaming giant warned that revenue growth could flatten in the current quarter following years of steady expansion.

The company reported a profit of $2.4 billion on revenue of $12 billion in the final quarter of last year and forecast revenue of about $12.1 billion for the current quarter, suggesting only marginal growth. In after-hours trading, Netflix shares dropped slightly more than five percent to $82.85.

The earnings report came as Netflix continues its push to acquire television and film company Warner Brothers Discovery (WBD). On Tuesday, Netflix revised the terms of its proposed deal, shifting to an all-cash offer aimed at giving WBD shareholders greater certainty.

Netflix said the updated proposal is expected to allow a shareholder vote on the transaction, which is supported by WBD’s board, by April. Co-chief executive Ted Sarandos said the deal would benefit shareholders, consumers and creators, while significantly expanding US production capacity and boosting investment in original programming.

The takeover bid has drawn opposition from Paramount Skydance, which earlier this month filed a lawsuit against WBD as part of its own attempt to acquire the company. Paramount is seeking to force WBD’s board to disclose information it believes would present its rival bid more favorably to shareholders.

The legal action, along with a letter from Paramount Skydance chief executive David Ellison to WBD shareholders, marks the latest development in a takeover battle that has been unfolding for months. Warner Brothers Discovery announced in late October that it was open to acquisition offers and later accepted Netflix’s proposal, while formally rejecting Paramount Skydance’s bid for the entire company.

Under the Netflix deal favored by WBD’s board, certain television assets such as CNN and Discovery would be spun off into a newly created, publicly traded company called Global Networks, rather than being included in the acquisition.

Ellison said Paramount Skydance remains committed to its tender offer and warned it would seek to rally shareholders against the Netflix agreement if a special vote is called ahead of WBD’s annual meeting.