Netflix will release its Q3 earnings on October 20. Ahead of the release, shares are not far off their 52-week lows, having declined over 40% in the past year. With the current earnings multiple of about 19x more than 40% below historical averages, I see opportunity for upside in the stock.
Netflix shares have dropped 26% this year even as revenue keeps climbing, and a largely overlooked segment of its business could be the catalyst that catches investors off guard.
The Walt Disney Company NYSE: DIS recently executed a content licensing agreement to syndicate intellectual property to Netflix, Inc. NASDAQ: NFLX. Selectively opening its proprietary ecosystem to share titles like "Percy Jackson and the Olympians" alongside legacy "Ice Age" films serves as a structural pivot.
The Warner Bros. Discovery deal that traders spent months positioning around is finally done, and Skydance (NYSE:SKYD) stock is now absorbing the arrival of the event itself.
NFLX's slowing growth, rising content costs and premium valuation amid fierce streaming competition make the stock one to avoid for now.
In the most recent trading session, Netflix (NFLX) closed at $68.69, indicating a +1.76% shift from the previous trading day.
NFLX's rising live sports costs are testing margin expansion as rights spending outpaces amortization and sports deliver limited viewing hours.
Netflix is rated Buy with a $74 fair value and $82 12-month target, reflecting margin expansion and resilient cash flow despite slower engagement growth. Current market pessimism over NFLX's growth and margins is overdone; my model assumes a 40% peak operating margin versus the market's implied 36%. Ad revenue growth, disciplined content spending, and improved licensing terms underpin margin expansion, while competitive threats appear muted near-term.
Netflix (NASDAQ: NFLX) has retained Wall Street support despite recent concerns over engagement trends, with TD Cowen maintaining its bullish stance on the streaming giant ahead of third-quarter earnings later this month.
Netflix investors have had little to celebrate in recent weeks. Shares of the streaming giant fell 14% in September, according to S&P Global Market Intelligence, extending a broader decline that has taken the stock down about 18% over the past month and 25% this year.
Netflix Inc (NASDAQ:NFLX, XETRA:NFC) co-CEO Ted Sarandos said the streaming giant is not growing as fast as he would like, with viewership up just 2% in the first half of 2026. "Overall, we're not growing as fast as I want us to," Sarandos said at Bloomberg's 2026 Screentime event in Los Angeles.
Netflix, Inc. (NFLX) has shed a quarter of its value this year. But that decline isn't the worst of the story.