Key Points
Netflix’s stock (NASDAQ: NFLX) has dropped 17% year to date, most recently on June 16, after reports confirmed the company lost a $22 billion acquisition bid for Roku to Fox. This marks the second missed opportunity for Netflix this year, having previously walked away from an offer for Warner Bros. in favor of a better offer from Paramount Skydance.
Despite Wall Street’s concerns about Netflix’s growth potential, the company reported $47 billion in trailing revenue and $13 billion in profit, driven by over 325 million paying members. Netflix plans to invest $20 billion in content production this year, citing disciplined capital allocation in its growth strategy. The streaming service estimates it has only captured 45% of its addressable market among broadband households, indicating potential for up to 800 million subscribers.
In the first quarter, Netflix achieved a 16% year-over-year revenue increase, but it faces stiff competition, notably from YouTube, which has a greater share of TV viewing time. Currently, the stock trades at 21 times 2026 earnings estimates, suggesting it may be undervalued given its strong brand and robust operating margin of over 30%.
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