- Raymond James downgraded WBD to ‘Underperform’ from ‘Outperform’, without giving a price target.
- The Future Fund LLC’s Managing Partner, Gary Black, called Netflix’s decision to pull out of the race to acquire Warner Bros. the best move for the company.
- Markets are similarly optimistic about Netflix’s decision, with the NFLX stock up nearly 8% in Friday’s pre-market trade.
Warner Bros. Discovery Inc. (WBD) received a double downgrade from analysts at Raymond James after Netflix Inc. (NFLX) pulled out of the race with Paramount Skydance Corp. (PSKY) to acquire WBD.
According to TheFly, analysts at Raymond James downgraded WBD to ‘Underperform’ from ‘Outperform’, without giving a price target.
Warner Bros. Discovery shares were down 3% in Friday’s pre-market trade. Retail sentiment on Stocktwits around the company trended in the ‘extremely bullish’ territory, with message volumes at ‘extremely high’ levels.
What Did The Analysts Say?
Raymond James analysts said in the note that with the Paramount-Netflix bidding war now coming to an end, the Warner Bros. Discovery stock has become just another arbitrage trade.
The firm added that it sees more attractive opportunities for potential returns for investors elsewhere in its coverage.
Analysts at Benchmark also downgraded the WBD stock to ‘Hold’ from ‘Buy’ while removing their prior price target. The firm stated that it appears that the Trump administration and the U.S. Department of Justice (DOJ) will approve the deal, given President Donald Trump’s affinity for the Ellison family.
Oracle Corp. co-founder Larry Ellison’s son, David Ellison, is the CEO of Paramount Skydance.
Best Move For Netflix, Says Gary Black
Meanwhile, The Future Fund LLC’s Managing Partner, Gary Black, called Netflix’s decision to pull out of the race to acquire Warner Bros. the best move for the company.
“We believe this is the best move for $NFLX shareholders and with the $2.8B termination fee for new content we believe NFLX stock can return to the ~$100/share level at which it was trading before its Dec 5 bid for $WBD,” Black said in a post on X.
Markets are also optimistic about Netflix’s decision. Netflix shares popped nearly 8% in Friday’s pre-market trade, with retail sentiment on Stocktwits around the company trending in the ‘extremely bullish’ territory. The stock was also the second-most-trending ticker on the platform at the time of writing.
WBD Calls Paramount Proposal ‘Superior’
After voicing their preference for Netflix’s offer until recently, the WBD board finally stated on Thursday that the Paramount proposal is “superior.”
While Netflix had four business days to propose revisions to its merger agreement with WBD, the company withdrew, stating that the price required to match Paramount’s offer made the deal no longer financially attractive.
Paramount stated that it is “pleased” with the WBD board’s decision.
How Did Stocktwits Users React?
One user on Stocktwits stated that WBD stock cannot dip much further, as shares can be sold for $31 very soon.
Another user stated that Netflix pulling out of the race is a win for consumers as well. “I think Warner Bros. would’ve been sanitized at Netflix,” they said.
WBD stock is down 0.1% year-to-date; PSKY stock is down 17%; and NFLX stock has declined 10%.
For updates and corrections, email newsroom[at]stocktwits[dot]com.