Netflix has had a wild ride lately. Honestly, if you’ve looked at your portfolio recently and saw that red downward line next to NFLX, you probably felt that familiar pit in your stomach. The Netflix stock price drop isn’t just one single event; it’s a messy mix of a 10-for-1 stock split, a massive $100 billion-plus bidding war for Warner Bros. Discovery, and a sudden tax bill from Brazil that caught everyone off guard.
It’s easy to panic when the price per share falls from over $1,100 to around $90. But before you sell everything, you have to look at the "why" behind the numbers. Sometimes a drop is a sign of a dying company. Other times, it’s just the market recalibrating after a period of insane growth.
Right now, Netflix is at a crossroads. It’s trying to transition from a pure "growth" company that everyone loves to a mature "value" company that actually makes a ton of profit. That transition is almost always bumpy.
The 90% "Crash" That Wasn't Actually a Crash
Let’s get the most confusing part out of the way first. In mid-November 2025, Netflix executed a 10-for-1 stock split.
If you owned one share worth $1,100 on Friday, you woke up on Monday morning owning ten shares worth $110 each. Your total investment didn't change at all. However, many casual observers saw the "90% drop" in the share price on their ticker apps and thought the sky was falling. It wasn’t. This was a deliberate move by management to make the stock more "accessible" to retail investors. Basically, it's easier for a regular person to buy a $110 stock than a $1,100 one.
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But even after adjusting for the split, the stock has been sliding. It's down roughly 30% over the last six months. Since the start of 2026, it has already shed about 6% of its value. That is a real drop, and it has nothing to do with the split and everything to do with uncertainty.
The Warner Bros. Discovery Elephant in the Room
The biggest thing weighing on the Netflix stock price drop right now is the potential acquisition of Warner Bros. Discovery (WBD).
Netflix is currently locked in a brutal fight with Paramount Skydance to buy WBD. We’re talking about a deal worth over $100 billion. For years, Netflix was the "cool kid" who didn't need anyone else. They built their own library. Now, they are looking at buying HBO Max, DC Studios, and a mountain of cable assets.
Investors are kind of freaked out about this for a few reasons:
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- The Price Tag: Netflix is reportedly considering switching to an all-cash offer. That's a lot of debt to take on.
- The "Leftovers": WBD comes with old-school cable channels. Netflix doesn't really want those, and nobody knows what they’ll do with them.
- Antitrust Drama: Regulators in the US and Europe are already sharpening their pencils. There is a huge risk the deal gets blocked after Netflix spends millions on legal fees.
When a company announces a massive acquisition, the stock usually drops because of the "overhang." People worry about how the integration will go. They worry that Netflix is buying growth because its own organic growth is finally slowing down.
Why Growth is Getting Harder
For the last two years, Netflix had two "magic buttons" it could press to grow: the password-sharing crackdown and the new ad-supported tier.
They worked. They worked incredibly well. Netflix added over 40 million subscribers in a single year during that push. But those were "one-time" fixes. You can only crack down on password sharing once. You can only launch an ad tier once.
Now, analysts like those at KeyBanc and Wedbush are worried about what comes next. If those engines are starting to cool off, where does the next 10 million subscribers come from? Netflix even stopped reporting its quarterly subscriber numbers recently. To many investors, that felt like a "we have something to hide" move, even if the company says it just wants people to focus on revenue.
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The Brazilian Tax Surprise and Margin Woes
Sometimes, it’s the small things that break the camel's back. In Q3 2025, Netflix missed its earnings expectations because of a $619 million tax dispute in Brazil.
It sounds like a boring accounting detail, but it pushed their operating margins down to 28% when Wall Street was expecting 31.5%. In the world of high-stakes investing, a 3% miss on margins is a huge deal. It suggests that doing business globally is getting more expensive and more complicated.
Is the Stock Oversold?
Despite the recent Netflix stock price drop, the company is still a beast.
- It reached 190 million monthly active users on its ad tier by late 2025.
- It’s moving into live sports, like NFL Christmas Day games and WWE.
- It still has the lowest "churn" (people canceling) in the entire industry.
Some analysts, like those at BMO Capital, still have a price target of $143 (split-adjusted) on the stock. They think the market is overreacting to the WBD deal and that the underlying business is actually healthier than ever. They see the current price in the $80–$90 range as a "support zone" where the stock might finally stop falling.
What You Should Do Next
If you are holding Netflix or thinking about buying the dip, you can't just look at the ticker. You have to look at the strategy. Here are the practical steps to take:
- Watch the January 20th Earnings: This is the big one. Management needs to explain exactly how they will pay for the Warner Bros. deal without ruining their balance sheet. If they give "soft" guidance for the rest of 2026, the stock could easily drop another 10%.
- Monitor "ARPU" (Average Revenue Per User): Since subscriber growth is slowing, Netflix has to make more money from the people they already have. Watch for news of price hikes. They recently raised the Premium plan to $25 and the Standard plan to $18. If people keep paying without canceling, that's a huge win for the stock.
- Check the Ad-Tier Monetization: It’s great that 94 million people use the ad plan, but are advertisers actually paying premium rates for them? We need to see ad revenue double in 2026 for the stock to justify its current valuation.
- Don't ignore the technicals: The stock's Relative Strength Index (RSI) is currently in "oversold" territory. Historically, when Netflix gets this beaten down, it usually sees a "dead cat bounce" or a relief rally within a few weeks.
The Netflix stock price drop is a classic case of a company outgrowing its old skin. It’s no longer the scrappy underdog; it’s the incumbent giant trying to swallow its rivals. That’s a risky game, and the market is making them pay for that risk right now.