Netflix (NASDAQ: NFLX) finds itself in an unusual position, generating record profits while its stock sits well below its 52-week high of $126.71.
The streaming giant’s trailing-12-month net income totals approximately $13.65 billion, surpassing the record $10.98 billion it earned across all of 2025.
Despite those record earnings, shares have fallen roughly 35% from their peak, trading near $82 as of late August 2026, after bouncing back from around $72 earlier in the month.
Part of the profit surge includes a one-time boost — a $2.8 billion pre-tax termination fee, roughly $2.3 billion after tax, collected in the first quarter when Netflix’s deal to acquire Warner Bros. Discovery’s studios and streaming business collapsed after Warner Bros. Discovery accepted a rival’s higher offer.
Even stripping out that one-time payment, the record holds on the operating line, with Netflix generating approximately $14.4 billion in operating income over the past four quarters, ahead of the $13.3 billion earned in all of 2025.
Second-quarter operating income rose 11% year over year to $4.2 billion, and management continues to forecast a 31.5% operating margin for 2026, expanding from 29.5% last year.
The company’s own outlook implies operating income growth of more than 20% for the full year, suggesting the underlying profit engine remains in strong shape regardless of what the market has priced in.
What shifted investor sentiment is the pace of revenue growth, which peaked at 17.6% in the fourth quarter of 2025 before slowing to 16.2% in the first quarter of 2026 and then to 13.4% in the second quarter.
Management’s third-quarter guidance calls for revenue growth of just 11.7%, and its full-year revenue outlook of $51.0 billion to $51.4 billion implies growth of 13% to 14% for 2026, with advertising revenue roughly doubling to about $3 billion contributing meaningfully.
At the stock’s 52-week high, shares traded at roughly 50 times Netflix’s 2025 earnings of $2.53 per share, a valuation that assumed mid-to-high-teens revenue growth would continue compounding for years.
With that growth trajectory now clearly moderating, the market has repriced NFLX accordingly, cutting the price-to-earnings multiple by more than a third when measured against earnings adjusted for the one-time termination fee.
Today, NFLX trades at roughly 25 times reported earnings, or about 31 times earnings with the fee removed, and approximately 21 times expected 2027 earnings — a dramatically smaller price tag per dollar of profit than investors were paying at the highs.
The repricing appears rational rather than panicked, reflecting a market updating its view to account for a business that is maturing rather than accelerating.
Netflix remains arguably the best-positioned company in streaming, with advertising revenue scaling rapidly and operating leverage continuing to expand across its global subscriber base.
However, with shares trading at about 21 times expected 2027 earnings, the stock looks priced more like a hold than a compelling buy at current levels, given that growth could decelerate further and competition for viewing time shows no sign of easing.
