In recent weeks, Wall Street traders have dramatically cut short interest in Warner Bros. Discovery shares, signaling growing conviction that Netflix’s acquisition proposal will succeed. According to S3 Partners data, short interest fell to just 3% of the company’s tradable float, down from 6% in July. Over the past month alone, bearish investors have covered approximately 30 million shares, coinciding with Netflix outbidding Paramount in the late-2025 auction for the media conglomerate.

Netflix’s offer prevailed following a marathon bidding war in which CEO David Zaslav attracted multiple suitors by showcasing HBO Max’s profitability turn-around and Warner Studio’s recent box-office hits. Traders cite Netflix’s willingness to assume WBD’s remaining $40 billion of debt as a key factor in its victory. Market participants now assume U.S., EU and U.K. regulators will grant approval, a conviction reflected in the rapid unwinding of bearish positions against WBD.

Despite mounting optimism, the deal faces an arduous two-year antitrust review process in Washington, where bipartisan lawmakers have raised concerns over Netflix’s growing market share. European Commission insiders and U.K. Competition & Markets Authority officials have similarly indicated plans to scrutinize the combined entity’s competitive impact on advertising, sports rights and third-party streaming platforms. Should regulators impose divestitures or reject portions of the transaction, traders warn short interest in WBD could swiftly rebound, and Netflix may face pressure to revise its all-cash offer.