Key Stats for Netflix Stock
- Current Price: $68.89
- Target Price (Mid): ~$138
- Street Target: ~$95
- Potential Total Return: ~100%
- Annualized IRR: ~17% / year
- Max Drawdown: 46.49% (July 20, 2026)
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free) >>>
What Happened?
Netflix, Inc. (NFLX) beat earnings expectations on July 16, executed the largest quarterly buyback in company history, and fell 7.26% the following session to close near $68.89. One line in the shareholder letter helps explain the gap: starting in 2027, the company will publish its viewing-hours report once a year instead of twice.
Investors read that as a company with decelerating engagement growth, reducing how often it discloses engagement growth. Third-quarter guidance also landed below the Street, and revenue came in a hair’s breadth, so the disclosure change did not act alone, and no source isolates which mattered more. But it explains why a quarter this profitable drew a reaction this negative, and it sharpens the valuation question now that shares trade under 20 times forward earnings, down from more than 50 in June 2025.
Why Management Says Hours Are the Wrong Scoreboard
Co-CEO Greg Peters spent a long stretch of the earnings call arguing that viewing hours were never the right measure, and his case is more substantive than the reaction suggested.
Live programming, he said, is expected to absorb about 5% of the content budget in 2026 and produce roughly 1% of view hours. Animation and kids’ television are expected to take the same share of spend and deliver about 8% of hours, eight times the raw output for identical dollars. Yet six of the ten largest new member sign-up days over the past five years came from live events. As Peters put it, “all hours are not created equal.” A metric ranking animation eight times above live tells little about which dollar worked harder.
He declined to share the internal quality metric, replacing it, calling the details a competitive advantage the company spent years developing. That is the crux. The argument for retiring hours is sound, and the replacement is unverifiable from the outside. Netflix said the change was meant to separate the viewing report from earnings, but investors are being asked to accept a qualitative engagement story with less quantitative backup than before.
The numbers underneath were mixed. Q2 revenue reached $12.56 billion, up 13.4% year over year but 0.18% below the $12,582.53 million analysts modeled, per TIKR. Diluted earnings per share of $0.80 beat the $0.79 consensus. The Q3 guide of $12.86 billion sits under the roughly $13 billion the Street wanted and implies about 12% growth, down from 13.4% in Q2 and 16.2% in Q1. CFO Spence Neumann addressed the deceleration directly, saying “we don’t manage the business on a quarter-to-quarter basis” and reaffirming full-year growth of 13% to 14%, worth about $6 billion of incremental revenue.
See historical and forward estimates for Netflix stock (It’s free!) >>>
The Margin Story Has New Evidence, and It Is Not Advertising
The cash line looked worse than the quarter was. Free cash flow came in at $1,525.17 million against a $2,614.08 million estimate, a 41.66% miss per TIKR, and fell roughly a third from $2.27 billion a year earlier. The cause is specific and non-recurring: Netflix collected a $2.8 billion termination fee in the first quarter after Warner Bros. Discovery’s board accepted a competing Paramount Skydance bid, and cash taxes on that windfall came due in Q2. Management reaffirmed full-year free cash flow of approximately $12.5 billion, which is guidance rather than a reported figure.
Netflix repurchased $4.7 billion of shares during the quarter, with roughly $27 billion of capacity left on the authorization, per Neumann. That is the largest quarterly repurchase in company history, though the board added $25 billion to the program in April, so the pace reflects an existing authorization meeting a lower share price rather than a decision made at the bottom.
The more interesting margin evidence came from co-CEO Ted Sarandos. Generative AI workflows have now been used across roughly 300 Netflix titles, concentrated in post-production. His specific proof point: the documentary series American Experiment features 17 minutes of AI-enhanced footage that were, in his words, “produced twice as fast and at half the cost of previous options.” Sarandos said those savings will likely be reinvested into more content rather than dropped to the bottom line, so this is a scope-and-speed story before it is a cost story. It is still the first quantified example the company has offered, and it matters because the margin thesis rests entirely on content expense growing more slowly than revenue. Sarandos put content spend up about 10% in 2026 against 13% to 14% revenue growth.
What Under 20 Times Earnings Actually Prices In
Netflix trades at 19.94x NTM earnings and 15.89x NTM EV/EBITDA, down from 50.14x and 40.03x in June 2025. Forward estimates did not fall to produce that. Consensus still models EPS climbing from $2.53 in 2025 to $3.55 in 2026 and $6.21 by 2030. The multiple did the work alone.
Peers frame the discount. Spotify trades at 31.94x forward earnings and 24.58x NTM EV/EBITDA, Take-Two Interactive at 33.48x and 25.18x. Disney is cheaper on both at 12.55x and 8.40x, but Disney is not compounding EBITDA near the 19.7% two-year forward rate TIKR projects for Netflix, nor earning a 30.7% return on invested capital. Netflix still carries a premium over most of the entertainment groups. It is a far smaller one than it carried at any of the quarterly marks TIKR shows since June 2025.
The Street has followed the price down rather than led it. TIKR shows the mean target falling from $126.19 at the end of 2025 to $95.28 as of July 23, with a high of $135.00 and a low of $70.00. Recommendations break down as 29 Buys, 7 Outperforms, 15 Holds, 1 Underperform, 1 No Opinion, and no Sells. That low target sits almost exactly where the stock trades today.
See how Netflix performs against its peers in TIKR (It’s free!) >>>
TIKR Advanced Model Analysis
- Current Price: $68.89
- Target Price (Mid): ~$138
- Potential Total Return: ~100%
- Annualized IRR: ~17% / year
See analysts’ growth forecasts and price targets for Netflix stock (It’s free!) >>>
This uses the mid case, realized at the end of 2030. Two drivers carry the revenue line, which the model compounds at around 9% a year, well below the 12.6% Netflix delivered over the past three years. The first is advertising, which management expects to roughly double to about $3 billion in 2026, a company target rather than a reported result. The second is pricing, with Peters noting that first-half increases in the United States, Mexico, and Spain performed consistently with prior changes.
The margin driver is operating leverage on content spend growing slower than revenue, which the model carries to a net income margin near 32%. The primary risk is that engagement growth stalls and pricing power follows, with hours up 2% in the first half and annual reporting from 2027 leaving investors less able to check. Every scenario in the model, including the low case, assumes revenue compounding above 8% and margins expanding. The assumptions are the thing to interrogate, not the outputs: if growth settles below that floor, none of the three cases describes the outcome.
Conclusion
The third-quarter report, expected in October, is the checkpoint, and the margin line matters more than the revenue line. Netflix guided to a 33.2% operating margin against 28.2% in the year-ago quarter, and hitting it requires content amortization decelerating to mid-to-high single digits in the back half, as the company has projected. The full-year target of 31.5% sits below both because first-half margins run richer than second-half margins.
See what stocks billionaire investors are buying so you can follow the smart money with TIKR.
Should You Invest in Netflix?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up Netflix, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track Netflix alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Analyze Netflix on TIKR Free →
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
