Netflix Is Down 40% From Its All-Time High. With No More Subscriber Numbers to Hide Behind, Is the Stock Still a Good Value?
Key Points
Netflix’s revenue growth cooled off in the first half of 2026.
Its FCF and EPS growth have also been lumpy.
But its outlook for the rest of the year is strong, and its stock isn’t too expensive.
Netflix's (NASDAQ: NFLX) stock closed at a record high of $133.91 on June 30, 2025. But today, the streaming media giant's stock trades at about $80. Let's see what caused that 40% decline -- and if it's becoming a good value play for patient long-term investors.
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What happened to Netflix over the past year?
Starting in the first quarter of 2025, Netflix stopped reporting its subscriber numbers. That was a jarring change, since many investors considered it a key performance metric. Still, Netflix insisted that its revenue, operating margin, and free cash flow (FCF) had become better metrics for evaluating its business. It also claimed its introduction of multiple pricing tiers -- including ad-supported and paid sharing plans -- changed the value of each member.
Metric |
Q2 2025 |
Q3 2025 |
Q4 2025 |
Q1 2026 |
Q2 2026 |
|---|---|---|---|---|---|
Revenue Growth (YOY) |
15.9% |
17.2% |
17.6% |
16.2% |
13.4% |
Operating Margin |
34.1% |
28.2% |
24.5% |
32.3% |
33.4% |
FCF Growth (YOY) |
87% |
21.3% |
35.9% |
91.4% |
(32.7%) |
EPS Growth (YOY) |
47.3% |
7.9% |
33.7% |
18.3% |
(88.9%)* |
Data source: Netflix. YOY = Year-over-year. *Adjusted for its 2025 stock split.
Over the past year, Netflix's revenue growth was driven by the expansion of its cheaper ad-supported tier, its overseas expansion, and hit shows like Stranger Things. But in the first half of 2026, its top-line growth decelerated as those tailwinds weakened.
Its operating margins held fairly steady over the past year, despite its seasonal spikes in production and marketing spending on higher-budget content. However, those costs caused more volatile swings in its FCF and EPS.
Netflix's termination of its bid for Warner Bros. Discovery (NASDAQ: WBD) this February -- following an aggressive bidding war against Paramount Skydance (NASDAQ: PSKY) -- also boosted its FCF and EPS in the first quarter of 2026 with a $2.8 billion breakup fee.
Is Netflix's stock a good value?
Netflix's stock pulled back from its record high amid concerns regarding its bid for Warner Bros. Discovery, its slower revenue growth in the first half of 2026, and its decision to start disclosing its engagement and viewing hours numbers once (instead of twice) per year starting in 2027.
Yet Netflix is still growing. For the full year, it expects its revenue to rise 13%-14%, driven by ad-supported revenue roughly doubling to $3.0 billion, while its operating margin expands by 200 basis points to 31.5%. Analysts expect its EPS to grow 42%.
At $80, Netflix's stock trades at 25 times forward earnings. It isn't a screaming bargain, but it's attractively valued relative to its near-term growth. It probably won't revisit its all-time high anytime soon, but it could be worth nibbling on as a higher-growth streaming media play.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.