Netflix Investors Apparently Excited Over Disney Acquisition Rumor

Netflix stock climbed above $100 per share on Monday, to its highest levels since May — fueled by a rumor circulating on Wall Street that Disney might possibly be interested in acquiring the video-streaming leader.

Netflix stock closed up 4.1% Monday, to $102.63 per share, on higher-than-usual volume. On Tuesday, Netflix shares climbed as high as $104.44 in early trading, before settling down to below the opening price of $103.50.

Rumors that the Mouse House or possibly Apple might be interested in snapping up Netflix — which currently has a market cap exceeding $44 billion — were alluded to in a research note by Robert W. Baird & Co. analyst Will Power. Regarding “recent M&A rumors,” Power wrote, “whether Disney, Apple or someone else, Netflix could become a target.”

Netflix investors have been concerned about the company’s slowing growth in the U.S., as it undertakes a shift to move all subscribers to the $9.99-per-month standard tier. The stock, which has a notoriously volatile history, is trading well off its $133.27 per share 52-week high.

Speculation that Disney might be looking to make a major deal for Netflix comes after the media conglomerate was said to be looking at buying Twitter, according to a Bloomberg report. Disney also has demonstrated a keen interest in the streaming-video market: In August, it announced the purchase of a 33% stake in Major League Baseball’s BAM Tech unit for $1 billion.

The first issue for Disney would be trying to justify the massive purchase price: Netflix trades at a whopping price-earnings ratio of around 320, and any deal would have a negative impact on Disney’s balance sheet and earnings. Disney also would face other potential hurdles if it actually moved to buy Netflix, including regulatory scrutiny and the fact that rival studios would be even more reluctant to play ball with a Disney-owned Netflix.

More Digital

  • Activision-Blizzard-Overwatch-League-Grand-Finals-2018

    YouTube Scores Exclusive Streaming for Activision Blizzard's E-Sports, Including Overwatch and Call of Duty Leagues

    YouTube landed a multiyear deal as the exclusive live-streaming partner for Activision Blizzard’s e-sports events worldwide, including Overwatch League, Call of Duty League, Hearthstone Esports. The agreement (which excludes China) promises to give a big boost to YouTube Gaming, the video giant’s dedicated home for all things related to games. It’s also a loss for [...]

  • Grammy Moments Brandi Carlile John Legend

    What's a Grammy Moment Worth? Brandi Carlile, John Legend, Label Execs Weigh In

    In simpler times, an artist could see album sales spike to over 500,000 in the days after a Grammy Awards broadcast appearance. That was Santana’s experience in 2000. Following a performance on the show and eight Grammy wins, “Supernatural” flew off the shelves — a gold certification from one key look. Today, that seems downright [...]

  • Netflix-logo-N-icon

    Netflix Sets Up Italian Office in Rome (EXCLUSIVE)

    After opening its doors in Paris last week, Netflix is setting up an office in Rome, Variety can reveal. The streaming giant has confirmed that it will move its Italian team, which is now based in Amsterdam, to new offices in the Italian capital, where they are currently seeking a space. The process will take [...]

  • Jill Dickerson - Snap

    Snap Taps OWN's Jill Dickerson to Lead Unscripted Programming

    Jill Dickerson has left OWN: Oprah Winfrey Network after more than a decade to join Snap Inc., the parent company of Snapchat, as a senior member of the Snap Originals team. A seasoned reality TV exec, Dickerson will help lead the development of Snap’s docu-series and unscripted programming and is based at the company’s Santa [...]

  • Deadspin - Jim Rich

    Deadspin to Relaunch Under New Editor Jim Rich, Following Mass Staff Resignation

    Deadspin, the irreverant sports news and opinion digital-media brand that has been dormant since last November, is going to get re-spun under newly hired editor-in-chief Jim Rich. G/O Media named the veteran editor and journalist, who formerly served as editor-in-chief of the New York Daily News, executive editor at Huffpost, and night sports editor at [...]

More From Our Brands

Access exclusive content