Stock Market Today, Feb. 27: Netflix Surges After Dropping Warner Bros. Bid and Securing Breakup Fee

Today’s Change

(13.77%) $11.65

Current Price

$96.24

Netflix (NFLX +13.77%), a subscription-based streaming service for movies and TV shows, closed Friday at $96.24, up 13.77%. The stock moved higher after Netflix dropped its bid for Warner Bros. Discovery while securing a breakup fee, and investors are watching how capital discipline will shape future content and deal spending.
Trading volume reached 190.8 million shares, coming in about 280% above its three-month average of 50.2 million shares. Netflix IPO’d in 2002 and has grown 80,341% since going public.

How the markets moved today

The S&P 500 (^GSPC 0.43%) slipped 0.43% to 6,879, while the Nasdaq Composite (^IXIC 0.92%) fell 0.92% to 22,668. Within streaming media services, industry peers Walt Disney (DIS +0.46%) closed at $106.04 (up 0.46%) and Warner Bros. Discovery (WBD 2.24%) finished at $28.17 (down 2.19%) as investors reassessed consolidation prospects.

What this means for investors

After a drawn out and highly watched bidding war, Warner Bros. Discovery deemed the latest acquisition bid made by Paramount Skydance (PSKY +20.93%) superior to the previously accepted bid from Netflix. Rather than counter with a new bid, Netflix bowed out, walking away with a $2.8 billion breakup fee from the original agreement.

After Netflix stock had plunged during the bidding process, investors cheered the final outcome. Netflix showed financial discipline by not overpaying, and now has a meaningful payout to use for additional content creation or to bolster its balance sheet further.

Netflix shareholders are now ready to move forward to focus on the core business that has generated strong returns over the past several years.

Howard Smith has positions in Netflix and Walt Disney. The Motley Fool has positions in and recommends Netflix, Walt Disney, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.

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