Netflix shares trade 43% below their 52-week high after a growth slowdown reset the stock's valuation from the mid-30s to about 20 times forward earnings. The company still guides to double-digit revenue growth, wider margins and record buybacks, and simple math on that guidance points to a share price near $90 to $120 by 2029.
Netflix trades at $72.39, 43% below its 52-week high of $126.71. The drop has reset the stock's valuation: shares now cost about 20 times forward earnings, down from the mid-30s on the same estimate at last year's high.
Growth cools from 16.2% toward 12%
Its second-quarter results, reported in mid-July, still show double-digit growth, just a slower pace of it. Revenue rose 13% year over year to $12.6 billion, matching the company's own forecast. But the trend is what markets are watching: growth eased from 16.2% in the first quarter to 13.4% in the second, and management's third-quarter forecast implies about 12%.
For the full year, Netflix expects revenue of $51.0 billion to $51.4 billion, or 13% to 14% growth. It also targets an operating margin of 31.5%, up from 29.5% in 2025. That margin target implies operating income growing more than 20% this year, so profit is compounding faster than sales.
Buybacks and a closed Warner Bros. Discovery chapter
Cash backs up that guidance. Netflix still expects about $12.5 billion of free cash flow for the year. Second-quarter operating income rose 11% year over year to $4.2 billion. The company put that cash to work buying back $4.7 billion of stock in the second quarter, its largest quarter ever. It also has $27.1 billion of authorization remaining.
Balance-sheet uncertainty has also cleared. The agreement to buy Warner Bros. Discovery's streaming and studio businesses, including HBO Max, was terminated in February, and Netflix collected a $2.8 billion termination fee for its trouble.
The arithmetic behind a 2029 stock price
Simple math on that guidance sketches a path forward. If revenue growth eases from about 13% this year to about 10% by 2029, revenue lands near $68 billion to $70 billion. Assuming margin expansion slows from its recent pace to settle around 35%, operating income reaches about $24 billion, up roughly 50% from this year's implied level.
Add a shrinking share count from continued buybacks, and earnings per share could plausibly reach $5.00 to $5.50 in 2029, up from the roughly $3.50 analysts expect over the coming year. Hold today's 20-times multiple, and that implies a stock price near $100 to $110 by 2029. Stretch the multiple from 18 to 22 times, and the band widens to $90 to $120.
Motley Fool contributor Daniel Sparks writes that his own read puts Netflix probably at $90 to $120 by 2029, with the outcome depending on growth stabilizing in the double digits. He says he isn't buying yet, though a couple of quarters of steadier growth would probably change that. If the deceleration doesn't stop, he notes, the arithmetic cuts the other way and the market could mark the multiple down further.
Source: The Motley Fool
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