Lionsgate Studios Corp. shares declined in premarket trading Wednesday, shedding some of the gains from a recent rally fueled by acquisition speculation. The stock had jumped nearly 14% in Tuesday's session after reports emerged that Netflix was among several media companies eyeing a potential buyout of the studio.
However, Netflix quickly dispelled those rumors. A spokesperson for the streaming giant told TheWrap that the company is "not interested" in acquiring Lionsgate and has "no plans" to make an offer. This denial followed a report from Semafer that had listed Netflix as one of the interested parties, though it noted no formal bid had been submitted.
As of premarket activity, Lionsgate shares were trading at $15.45, down 5.6% from Tuesday's close of $16.36. The stock had hit an all-time high the previous day on the takeover chatter. Premarket trading can be thin, leading to larger-than-usual price swings.
Despite the Netflix denial, analyst sentiment remains positive. Baird raised its price target on Lionsgate to $20 from $18, maintaining an Outperform rating. The firm cited the company's strong fourth-quarter results and its valuable film library, which includes major franchises like "John Wick" and "The Hunger Games." Baird's price target is a 12-month projection and is not a guarantee of future performance.
Lionsgate reported fourth-quarter revenue of $906.5 million, with operating income of $117.5 million and adjusted OIBDA of $165.4 million—the best quarterly performance for that metric in 12 years. CEO Jon Feltheimer noted that the company's content library generated $1 billion in trailing 12-month revenue for the third consecutive quarter, while branded, repeatable properties now account for over half of its film, TV, and live entertainment projects.
The broader market for content is heating up, with major players like Netflix, Warner Bros. Discovery, and Paramount all actively seeking to bolster their libraries. Netflix co-CEO Ted Sarandos acknowledged on an April earnings call that the company has "built our M&A muscle," though he did not comment on specific targets. This environment has put smaller content libraries like Lionsgate's in the spotlight.
However, risks remain. If no serious buyer emerges—especially after Netflix's denial—Lionsgate stock could lose the takeover premium it gained on Tuesday. The company itself has warned that film and TV performance can be unpredictable, citing factors such as funding needs, budget overruns, competitive pressures, and pricing volatility.
Lionsgate completed its separation from Starz earlier this year, positioning itself as a standalone "pure play" content business. The company's library of over 20,000 film and television titles provides a steady revenue stream, but the lack of a clear buyer could weigh on shares in the near term.
The New York Stock Exchange regular session begins at 9:30 a.m. EDT. The exchange will be closed on Friday, June 19, in observance of Juneteenth.
