Netflix shares closed at $74.21 on Aug. 12, down 39.4% over the past 52 weeks before climbing 5.43% to $78.24. The stock now trades at 23.4 times trailing earnings, down from roughly 47 times in 2024 and 2025, even as trailing earnings grew 34.8% and revenue rose 17.6% over the past year.
Netflix stock closed at $74.21 on Aug. 12, down 39.4% over the past 52 weeks and just 14% above its 52-week low, then climbed 5.43% to $78.24.
Netflix walked away from two big deals
Paramount Skydance won a $111 billion bidding war for Warner Bros. Discovery, and Fox landed a buyout proposal for Roku. Netflix passed on both. The company bid $82.7 billion for Warner Bros. Discovery, then walked away when the price rose too high, and it also looked at buying Roku before passing. Instead, Netflix refinanced $1 billion of debt.
A scheduling change triggered the latest sell-off
The latest slide followed Netflix's decision to publish its engagement report once a year instead of twice, starting in 2027. Shares fell as much as 12% on that news, which suggests the market was already looking for a reason to sell. Trading volume has stayed elevated since the Warner Bros. Discovery bidding drama started in December.
The numbers behind the discount
None of that changes the underlying business. Netflix posts a 31.1% return on invested capital and $13.7 billion in trailing net income on $48.8 billion in sales, with trailing earnings up 34.8% and revenue up 17.6% over the past year. The stock trades at 23.4 times trailing earnings, 19.5 times forward estimates, and 27.7 times free cash flow, with a PEG ratio of 0.89 — down from roughly 47 times trailing earnings across 2024 and 2025. The average analyst price target of $94.20 implies 26.9% upside.
Netflix is also wiring AI production tools into about 300 titles, and it continues expanding games and the Netflix House attraction. The company still expects to generate $12.5 billion of free cash flow in 2026.
That combination of a shrinking valuation multiple and double-digit earnings growth is what frames the dip as a potential opportunity rather than a warning, according to the report.
Source: The Motley Fool
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