Netflix Sees $10 Million Block Trade in Put Options as Stock Slump Worsens
$Netflix(NFLX)$
An active buyer purchased put options that give their holder the right to sell 1.39 million Netflix shares at $102 each over the next 11 days. That block trade is almost 68X the open interest.
Put options have gained some appeal as the stock declined by about 30% from its all-time high reached at the end of June. Shares have tumbled amid worries that the streaming giant’s debt could pile up should it succeed in buying $Warner Bros. Discovery(WBD)$
"Market leaders like Netflix that hold a breadth of film libraries and original content production on a global basis with local country programming in their language are poised to win," CFRA analyst Kenneth Leon, who has a “buy” rating on the stock, wrote in a note to clients Saturday, citing his "positive fundamental outlook on the movies & entertainment sub-industry."
Unlike Leon, 18 other analysts who covered the stock have lowered their price target over the past month, data compiled by Bloomberg show. That came amid uncertainty over the fate of its bid to buy Warner Bros. and the deal's impact on the company's debt load.
Last week, Netflix said it refinanced part of the $59 billion bridge loan it secured to help pay for its planned acquisition of Warner Bros., lowering its borrowing cost. That disclosure was filed with the Securities and Exchange Commission on the same day when rival $Paramount Skydance Corp(PSKY)$ said Oracle Chairman Larry Ellison agreed to personally guarantee $40 billion in equity financing for the company's competing $108.4 billion offer for Warner Bros.
Paramount also amended the terms of its offer, including raising the reverse termination fee to $5.8 billion, from $5 billion.
"Paramount"s revised bid changes little as Warner Bros. shareholders decide if Netflix's bid is better," Morningstar analyst Matthew Dolgin, wrote in a note to clients last week. “If not enough shares are tendered and Paramount doesn't sweeten its offer, shareholders are left with the Netflix deal, entailing a slightly longer and potentially more difficult regulatory path, as well as dependence on the value of the Netflix stock price and Discovery Global shares they will retain.”
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