Market value evaporates $40 billion, but it doesn't scare individual investors! Netflix (NFLX.US) welcomes the buying frenzy.

Market concerns about Netflix's (NFLX.US) planned acquisition of Warner Bros. Discovery (WBD.US) have caused Netflix's market value to evaporate by $40 billion in just six trading days. However, for retail investors, this is actually a strong buy signal. In the week ending Monday, Netflix was the third most actively traded stock on the Interactive Brokers Group, Inc. Class A platform. On the Fidelity platform, buy orders outnumbered sell orders, with a ratio of more than three to one. Data from J.P. Morgan also shows strong retail buying momentum. Steve Sosnick, Chief Strategist at Interactive Brokers Group, Inc. Class A, said, "Our clients are indeed showing a tendency to buy into stocks they believe may bounce back when they drop." He added that the combination of the deal with Warner Bros. Discovery, market volatility, and stock price decline is "exactly why we see it (Netflix) rising to prominence." Netflix's stock price fell by 15% from December 2 to 10, marking its worst six-day losing streak since May 2022. The stock has dropped by 23% over the past two months, as concerns about its revenue growth prospects have intensified due to the risks associated with acquiring Warner Bros. Discovery. Paramount Skydance (PSKY.US) has made a hostile takeover offer of $108 billion for Warner Bros. Discovery, and U.S. President Trump's potential anti-monopoly concerns about Netflix's planned acquisition have further heightened market uncertainty, leading to the possibility of a bidding war and potential regulatory opposition. However, similar downturns often attract retail demand, as they generally believe that stock prices will eventually rebound. Although Netflix's recent steep decline is attracting retail investors at an increasingly faster pace, their interest can be traced back to media reports at the end of October that the company was exploring a bid for Warner Bros. Discovery. According to Vanda Research, since then, retail investors have purchased over $520 million worth of Netflix shares. Data shows that Netflix's stock had a strong start to the year, rising by 50% by the end of June, making it the fourth best-performing stock in the Nasdaq 100 index in the first half of the year. However, its performance reversed in the second half of the year, falling by 30% and becoming the seventh worst-performing stock in the index. The stock is currently up only 5.5% in 2025. Based on a price-to-earnings ratio of 31 times expected earnings for the next 12 months, the stock is trading near its lowest levels in over a year and below its five-year average P/E ratio of 34 times.