Netflix Inc ( NFLX ) shares slipped on Wednesday following reports that the company has submitted a mostly cash bid for Warner Bros. Discovery Inc's ( WBD ) studios and streaming division.

NFLX shares are retreating from recent levels. See the full breakdown here.

What Happened: According to Reuters, Netflix's ( NFLX ) proposal to acquire Warner Bros. Discovery's ( WBD ) studios and streaming operations is aimed at cutting costs for consumers through bundled access. In recent talks, Netflix ( NFLX ) suggested that pairing its platform with HBO Max would deliver better value, people familiar with the negotiations said.

The strategy also seems to be aimed at putting regulators at ease with the situation. Netflix ( NFLX ) is portraying the merger as a means of price-cutting to deny the claim that the joining together of two large subscription services would result in a less diverse market for consumers or an increase in costs.

A successful deal would give Netflix ( NFLX ) access to Warner Bros' massive content library, including the full HBO catalog, the Warner Bros film archive and DC Comics titles. Nevertheless, people who are knowledgeable about the talks suggested that the merger would not lead to a noticeable increase in the number of Netflix ( NFLX ) users, as a great number of the current HBO Max subscribers are already users of Netflix ( NFLX ).

Apart from the business implications, Netflix ( NFLX ) encounters obstacles of political nature. The Pentagon has condemned certain parts of its production while GOP politicians have indicated that the merger with Warner Bros. Discovery ( WBD ) would result in excessive Netflix ( NFLX ) power and decreased diversity of choice for the customer.

NFLX Analysis

Currently, Netflix ( NFLX ) is trading 9.6% below its 50-day moving average and 8.9% below its 200-day moving average, suggesting a bearish trend in the short to medium term. The stock’s position relative to these moving averages highlights a lack of upward momentum, which could deter potential buyers and signal caution among investors.

The 52-week range for Netflix ( NFLX ) shares has been between $82.11 and $134.11, indicating that the current price is closer to the lower end of this spectrum. This proximity to the lower range may attract bargain hunters, but it also raises concerns about the stock’s ability to maintain upward momentum in the face of recent declines.

Volume on Wednesday was reported at 31.1 million shares, which is higher than the average trading volume for the stock at this point in the session. Elevated volume during a downtrend can indicate strong selling pressure, which may lead to further declines if bearish sentiment persists.

Support levels for Netflix ( NFLX ) can be identified around the recent low of $102.03, with additional support potentially found at the $100 psychological level. Resistance is likely to be encountered near the $106 mark, where the stock has struggled to maintain upward momentum.

NFLX Price Action: Netflix ( NFLX ) shares are trading down 5.20% at $103.66 at the time of publication on Wednesday, according to Benzinga Pro. Netflix ( NFLX ) is currently trading about 23% below 52-week highs.

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