Netflix's stock took a hit on Tuesday despite co-CEOs Ted Sarandos and Greg Peters' optimistic presentation regarding the potential acquisition of Warner Bros. Discovery. The company's shares fell 4.9% in after-hours trading, adding to a 15% decline since the deal was initially announced in early December.

The proposed acquisition values Warner Bros. Discovery at $83 billion. Sarandos and Peters argued on the earnings call that the deal would significantly accelerate Netflix's core streaming business and facilitate expansion into television and theatrical film production. They emphasized Netflix's history of successful transformations, citing its evolution from a DVD-by-mail service to a streaming giant.

However, investors remained unconvinced. The market's reaction suggests concerns about the financial implications of such a large acquisition, particularly in a competitive streaming landscape. The deal comes at a time when Netflix is facing increased pressure from rivals like Disney+ and Amazon Prime Video, all vying for market share and subscriber growth.

Netflix's pursuit of Warner Bros. Discovery reflects a broader trend of consolidation within the media industry. The company, once a disruptor, is now seeking to solidify its position through strategic acquisitions. This move signals a shift towards a more traditional media model, where scale and content libraries are paramount.

The future success of the acquisition hinges on Netflix's ability to integrate Warner Bros. Discovery's assets effectively and realize the promised synergies. The company will need to demonstrate a clear path to profitability and justify the significant investment to regain investor confidence. The market's initial response indicates a cautious outlook, suggesting that Netflix faces an uphill battle in convincing investors of the deal's long-term value.