Netflix Pitches ‘Buyback-and-Chill’ Strategy

When you’re unlucky in love, sometimes all you can do is work on yourself.

After missing out on would-be Hollywood partner Warner Bros. Discovery (WBD), Netflix is looking inward. On Thursday, as WBD shareholders finally gave their stamp of approval to the company’s tie-up with Paramount Skydance, Netflix was too busy kicking off a massive share buyback program to notice. Still, it’s too soon to tell who’s winning this breakup.

Winning is Losing

The Netflix story has had more twists and turns this year than the final season of Stranger Things. First, when the company seemed to win the bidding war for WBD, shares fell some 9%. Then, when Paramount submitted a final winning counteroffer, forcing Netflix to bow out, shares bounced back some 10%. Investors saw winning as losing and losing as winning. 

But the good vibes haven’t lasted, and the market is now back to wondering if WBD was the one that got away. A first-quarter earnings beat last week was overshadowed by news that Reed Hastings, its co-founder and chairman, would step down in June and, worse, by weak second-quarter guidance suggesting growing subscriber churn. Shares have fallen 13% in the week since its earnings call, though not everyone is buying the doom story. “I am surprised by how negatively the market has reacted to Netflix’s earnings,” Third Bridge sector analyst John Conca told The Daily Upside. “I think the fear of churn is mitigated by what is expected to be better monetization in the ad-supported tier.”

Now, Netflix is hoping it can deliver the type of pick-me-up its sagging share price needs:

• The company is authorizing a massive $25 billion share buyback program, according to an SEC filing on Thursday. That’s in addition to the $6.8 billion \remaining in a $15 billion buyback program launched way back in December 2024. 
• The move will return some cash to shareholders, potentially boosting its share price along the way (its stock still dipped some 0.4% Thursday). The decline followed company leaders vowing to invest $20 billion this year “in quality films and series” after backing away from its $72 billion WBD bid.

Outtakes: The buyback plan is only half of Netflix’s post-WBD story. Since then, the company has also acquired an AI startup led by Ben Affleck and launched kids-focused gaming app Netflix Playground. On Wednesday, reports surfaced that it was in final talks to buy the historic Radford Studio Center lot in Los Angeles, where Seinfeld and Gilligan’s Island were filmed, to shore up its real estate footprint. And, yes, since walking away from WBD, it has also announced another round of subscription price hikes.