Netflix ⁣shares ⁢dipped Monday after Paramount announced a ⁣hostile takeover bid, fueling worries on Wall street that the​ streaming giant may not‍ be able to pull off its⁣ audacious acquisition.

Netflix stock closed⁤ down nearly 3.5% to $96.79 a share after Paramount moved to ⁤take its case directly to Warner Bros. Discovery shareholders, offering $30 a ⁣share in a deal valued at $78 billion for the whole company. Last week, Netflix said it ⁢reached an agreement with WBD to buy its film and ⁣TV studios, Burbank lot, HBO and HBO⁢ Max for $27.75 a share, a $72-billion offer. Netflix woudl also take⁤ on more ‍than $10 billion in Warner Bros. debt, for a deal value of $82.7 billion.

On Monday, analyst Jeffrey Wlodarczak, CEO of Pivotal Research Group, downgraded his rating ⁢on Netflix stock from buy to hold, citing concerns that ⁢Paramount’s bid could increase the price Netflix could pay for the WBD assets. Regulatory issues may​ also change the‍ terms of⁣ the deal,⁢ such as Netflix giving up HBO to a rival, Wlodarczak said. “the question is, ⁣what modifications might they have to⁤ make?” he said.

Wlodarczak ‌also questioned Netflix’s ⁤engagement levels with customers, which⁢ is key‍ to retaining subscribers on the platform. He⁢ said that “this very expensive⁣ deal” highlights Netflix’s⁢ concern that short-form entertainment on platforms like⁤ TikTok and YouTube​ are attracting younger consumers.

YouTube – once known ‍as a place for amateur user-generated videos – has become an entertainment powerhouse, encapsulating the largest percentage of streaming on U.S. TVs, ‍according to nielsen. In October, YouTube represented 12.9% of U.S. TV viewing⁤ time, compared to Netflix’s 8%.

Netflix said its customer engagement “remains healthy,” noting in a​ shareholder letter in October that⁢ it grew its engagement in the U.S. and U.K. by 15% and⁢ 22%, from the fourth quarter of 2022 to the third quarter‌ of 2025, citing data from Nielsen and Barb, which tracks viewership.

Equity research publisher​ MoffettNathanson analysts said questions ⁣have‍ been building about Netflix’s engagement growth, adding that even though Netflix’s share of total TV time started to grow ‌in the second half of the year, “YouTube’s share gains have overshadowed most of⁢ the other ⁣streaming platforms.”

“There’s issues with​ Netflix engagement, sort of ‌flatlining,” Wlodarczak said. “you get a ‌lot better content, it should⁤ help with your engagement. … ​Is this a signal they’re really starting