Netflix Inc. closed Friday's trading session with a 1.6% gain, finishing at $82.20, but shares dipped slightly to $82.06 in after-hours activity. The movement follows reports that U.S. antitrust regulators are examining the streaming giant's conduct as part of their review of its proposed $82.7 billion acquisition of Warner Bros Discovery's studio and streaming assets.
Regulatory Hurdles Emerge
According to a Wall Street Journal report, the Department of Justice is investigating whether Netflix engaged in anti-competitive behavior. Reuters noted that a civil subpoena was issued to another entertainment company, seeking information about potential exclusionary practices that could consolidate market power. Netflix responded through attorney Steven Sunshine, stating the company has "not been given any notice" of a monopolization investigation beyond the customary merger review process.
Warner shareholders are scheduled to vote on the deal in March, pending a final proxy statement. The timeline faces additional pressure from Paramount Skydance, which has extended its competing tender offer to February 20.
Broader Market Context
The regulatory developments arrive during a data-heavy week for U.S. markets. Investors are awaiting Wednesday's monthly jobs report and Friday's consumer price index reading for clues about potential Federal Reserve rate cuts. Angelo Kourkafas, senior global investment strategist at Edward Jones, observed that rate expectations have remained "remarkably stable" recently.
Netflix shares benefited from a broader market rally on Friday, with the Dow Jones Industrial Average surpassing 50,000 for the first time. The S&P 500 gained nearly 2%, while the Nasdaq Composite rose over 2%, fueled by strength in semiconductor stocks.
Analysts suggest streaming stocks are increasingly trading on regulatory sentiment rather than traditional metrics like subscriber growth. Investors are monitoring potential impacts on pricing power, content rights, and talent contracts should further industry consolidation occur.
The bearish scenario involves a prolonged antitrust review that increases costs, potentially forces structural concessions, and leaves Netflix shares trading on speculation rather than fundamentals. However, macroeconomic developments—particularly surprises in employment or inflation data—could overshadow company-specific news for high-multiple stocks like Netflix.
