Netflix (NASDAQ: NFLX) has endured a brutal stretch over the past twelve months, with shares falling roughly 41% and declining 26% so far in 2026.
The streaming giant’s slide has been fueled by a combination of slowing revenue growth, a failed acquisition bid, and broader investor uncertainty about its long-term direction.
Netflix was widely considered the frontrunner to acquire most of Warner Bros. Discovery’s (NASDAQ: WBD) assets, but investors pushed back hard on concerns about overpayment and debt burden.
When Paramount Skydance (NASDAQ: PSKY) stepped in with a larger counter-bid and walked away with the deal, Netflix was left empty-handed and its stock took another hit.
Revenue growth has been decelerating across recent quarters, coming in at 13% year over year in Q2 2026, compared to 16% in Q1 and 18% in Q4 2025.
The company’s Q3 guidance calls for revenue of $13 billion, representing 12% year-over-year growth, and Netflix has narrowed its full-year 2026 revenue forecast to a range of $51 billion to $51.4 billion.
Despite the revenue slowdown, operating margins continue to climb, reaching 33% in Q2 2026, up from 24% in Q4 2025, with a 31.5% full-year margin outlook representing improvement over the 29.5% posted in 2025.
A key driver of those expanding margins is advertising revenue, which Netflix expects to double to $3 billion in 2026, reflecting the growing strength of its ad-supported tier.
Free cash flow also remains a standout strength, with Netflix projecting $12.5 billion in free cash flow for 2026, up from $10.1 billion in 2025, giving the company significant financial flexibility.
Viewership growth has also quietly improved, rising 2% in the first half of 2026 compared to 1.5% growth during the same period in 2025, suggesting audience engagement remains healthy.
The sell-off has dramatically compressed Netflix’s valuation, with the stock now trading at just 21 times earnings, down sharply from 63 times earnings a year ago, marking a four-year low for its price-to-earnings ratio.
Wall Street remains broadly optimistic, with 68% of analysts rating NFLX as a buy and a median price target of $94.50, implying roughly 37% upside over the next twelve months.
For long-term investors, the combination of expanding margins, growing free cash flow, and a compressed valuation may represent a compelling entry point into the streaming market’s dominant player.
