"(Bloomberg/Felice Maranz) Shares of Netflix Inc. have tumbled since October, when the streaming giant became one of the presumed suitors for Warner Bros. Discovery Inc. But despite a 28% plunge in less than three months, the stock still appears to be too expensive to entice investors. Netflix is not a screaming buy' at the current price levels, said Christopher Brown, a financial adviser in private wealth management at Synovus Securities, who added that he owns Netflix shares personally and Synovus does in its portfolios."
"The shares, which fell about 2% on Friday to the lowest intraday since April 9, are currently trading for around 28 times expected earnings over the next 12 months, which is a higher valuation than video streaming rivals like Walt Disney Co., Amazon.com Inc. and Alphabet Inc., which owns YouTube, as well as the S&P 500 and Nasdaq 100 indexes. Paramount Skydance Corp., which also is bidding for Warner Bros. and operates Paramount+, trades for less than 13 times forward earnings."
"But Wall Street's primary doubts about the streamer now center around its bid for Warner Bros., which is valued at $82.7 billion and would combine its service with Warner Bros.' film and TV studios, HBO Max and HBO. Netflix shareholders have been skeptical about the deal for months. They're worried about the cost, the potential for a regulatory fight and whether the combination would succeed given Netflix's limited experience with big mergers."
Netflix shares have declined substantially since midyear, sliding about 28% since October and losing a third of their value since a June high. The stock trades near 28 times forward earnings, above peers such as Disney, Amazon and Alphabet and well above Paramount Skydance's sub-13 multiple, though below Netflix's five-year average multiple of 34. The shares plunged after an earnings report raised growth concerns and investors now focus on the $82.7 billion bid for Warner Bros., with shareholder skepticism centered on transaction cost, potential regulatory challenges and Netflix's limited track record with large mergers. The stock ranks among the worst performers in the Nasdaq 100 since June.
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