Netflix Is Down 41% in 1 Year. Could the Sell-Off Be Nearing an End?
2026-07-27 07:20
•Dave Kovaleski •The Motley Fool
••• •• Axe Capital view
Netflix’s Deep Dive: A Local Lens on a Global Streamer
Netflix’s 41% drop looks steep, but the company's fundamentals hint the worst might be behind it.
Netflix’s stock has taken a beating, down 41% in a year, largely on fears about slowing growth and a costly failed acquisition attempt. But let's not overlook that Netflix still leads the streaming pack and is running with an operating margin north of 30%, which is impressive for a growth company. Its ad revenue is set to more than double by 2026, which could offset some subscriber growth concerns. Valuations have dipped to roughly 21 times earnings, the lowest in years, making it a more palatable entry point. While none of this directly impacts JSE listed stocks, it matters to the rand (USD/ZAR). A stronger Netflix recovery would likely support tech sentiment globally and could lift emerging market risk appetite, thus easing rand pressure. Watch South African media plays like Naspers and Prosus, which have Netflix exposure. The catch? Streaming is fiercely competitive and a global recession could dampen advertising dollars and subscriber spending. this is just my opinion and not financial advice
I’d watch Netflix closely and consider adding exposure through Prosus or Naspers if the USD/ZAR stabilises below 18.5, as the risk/reward is more attractive now. Avoid jumping in too early before confirmed margin improvements.
- Netflix (NFLX)
- USD/ZAR
- Prosus
- Global economic slowdown reducing ad spend and subscriber growth
- Increased competition forcing heavier content investment
6/10
Netflix stock has plummeted 41% over the past year amid concerns about declining revenue growth and a failed bid to acquire Warner Bros. Discovery. However, the article argues these concerns are overblown, highlighting Netflix's strong market position, rising operating margins (33% in Q2), growing ad revenue expected to double to $3 billion in 2026, and robust free cash flow of $12.5 billion. With a P/E ratio of 21x (lowest in four years) and 68% of analysts rating it a buy with a median price target of $94.50, the stock could return approximately 37% over the next 12 months.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Dave Kovaleski
Categories: Equities, Earnings, M&A
Tickers: NFLX, WBD
Sentiment: Positive - Despite the 41% stock decline, the article presents a bullish case citing strong fundamentals: market leadership, rising operating margins, growing ad revenue, robust free cash flow, and attractive valuation at 21x earnings (lowest in 4 years). Wall Street consensus is bullish with 68% buy ratings and 37% upside potential. Mentioned as the target of Netflix's failed acquisition bid that was ultimately acquired by Paramount Skydance. No specific analysis or sentiment is provided about the company itself in the article.
Keywords: streaming, revenue growth, operating margins, advertising revenue, free cash flow, valuation, analyst ratings
Insights:
- NFLX: Positive: Despite the 41% stock decline, the article presents a bullish case citing strong fundamentals: market leadership, rising operating margins, growing ad revenue, robust free cash flow, and attractive valuation at 21x earnings (lowest in 4 years). Wall Street consensus is bullish with 68% buy ratings and 37% upside potential.
- WBD: Neutral: Mentioned as the target of Netflix's failed acquisition bid that was ultimately acquired by Paramount Skydance. No specific analysis or sentiment is provided about the company itself in the article.