Netflix is undervalued: worth ~$115 vs $70 today, ~64% upside over 12-18 months; largest holding, buybacks, streaming tailwinds, but slowing revenue growth. He won't buy before Oct. 20, 2026 earnings, sees no catalyst, expects revenue estimates more likely missed, and fears a post-earnings decline more than a rise.

Netflix stock fell 25% in 2026. Investor sentiment is extremely negative, and Netflix is the largest asset in my investment portfolio, ranking it as one of the best stocks you can buy right now.

The company is scheduled to announce its quarterly earnings results after the markets close on October 20, and investors are asking me whether I should buy the stock again before or after the earnings, and whether the stock actually represents a buying opportunity before this huge update.

I will answer this question in this video, and I will also tell you about my plans regarding my shares, and when or if I intend to add more shares to my current Netflix position .

Netflix is facing many headwinds. Some of them are of the company's own making, and I wanted to review some of the biggest risks Netflix currently faces , as well as the management team's expectations and the latest developments.

For 2026, they believe they will generate revenues of approximately $51.2 billion, with operating profit margins reaching 31.5%. These revenue projections were somewhat disappointing , while the operating margin projections were not, so investors are concerned that the company may be focusing too much on profitability and perhaps should invest more in content and other areas to stimulate and accelerate revenue growth.

Since the company no longer reports subscriber numbers, the data that investors point to as evidence of a business slowdown is engagement figures. Watching hours in the first half of 2026 increased by only 2% for Netflix compared to 1.5% in 2025.

So, the business is growing very slowly in terms of engagement hours, and this is an indicator of the value of the company's offering to customers.

If people don't watch Netflix much, they won't find much value in their subscription, and are therefore more likely to cancel it. This is why this figure is very worrying for investors.

But the administration is pointing here to a strong competitive influence from this year's Winter Olympics and World Cup . This makes some viewership figures look worse than they actually are.

Netflix doesn't highlight this specifically , but I also think a lot of the engagement numbers have dropped because people are watching more short-form content on platforms like TikTok, Instagram Reels, and YouTube Shorts.

This, in my opinion, is Netflix's biggest competitor in terms of engagement right now.

They are addressing this by offering their own category of short content. That step is still in its early stages. I am not very optimistic, given that the initial success was not entirely clear, but I will be watching this closely as one of the categories that Netflix may be able to focus on, expand on and make better and more attractive to its subscribers.

Another worrying category is that if engagement does not grow , customers will be less tolerant of price increases, which have become almost an annual or semi-annual occurrence at Netflix for about 7 years.

They have drastically increased subscription prices.

The management team says the results of the recent price increases are consistent with previous changes and their expectations. In other words, many people did not cancel their subscriptions as a result of the price increase.

But I think they have reached the limits of how far they can raise prices, especially in the current macroeconomic landscape where the cost of living is rising for most people in most parts of the world, and they do not need to see another price increase .

Even if Netflix were to raise its prices by a dollar a month overall, it would not have a significant impact on most of its subscribers worldwide, but psychologically, consumers have reached their limits with regard to these increases.

People are paying more for almost everything, and they are exhausted and resentful of this situation. This may be one of the reasons you receive that email that says, "As you know, we're going to raise your subscription by one dollar a month," and people who are already upset about the high prices may cancel their subscriptions out of frustration and emotional reaction.

Therefore, this limits the pricing power that Netflix has, at least in the near term. There has already been a significant slowdown in revenue growth, with more expected. You can see that their revenue growth rate peaked at 17.6% in the fourth quarter of 2025.

In the first quarter of 2026 it dropped to 16.2%, and from the first quarter to the second quarter there was a significant decrease from 16.2% to 13.4%, and according to management's expectations, it will drop further to 11.7% in the next quarter.

So, that's a significant drop from 17.6% to 11.7% over three quarters. This decline is not only significant at 6%, but it is also rapid, occurring in just three quarters. This is certainly worrying.

Now, furthermore, if you were to ask me whether Netflix is more likely to exceed or fall short of these revenue estimates, I would say it is more likely to fall short of those estimates.

Since the management team made these projections, the macroeconomic headwinds have intensified. Oil prices and the cost of living have risen, and the pace of wars between countries and geopolitical tensions has accelerated and worsened.

Overall economic performance has deteriorated in most parts of the world. This is not a favorable macroeconomic situation for Netflix.

Furthermore, Netflix has not been very successful in the past few months. There was no viral spread or word-of-mouth that would help Netflix attract subscribers. For these reasons, I believe Netflix is more likely to miss rather than exceed revenue estimates in the next quarter.

Operating income is expected to reach $4.268 billion. Once again, Netflix is more likely to fall short of that estimate than exceed it based on revenue figures. However, operating income depends in part on the timing of the company's expenditure and cost initiatives.

Therefore, I am less confident in predicting whether it will exceed or fall short of the estimates . I am inclined to expect that the results will be roughly in line with what they expect.

One reason for the decline in investor sentiment towards Netflix is that the company is disclosing less information. The most prominent of these are the subscriber numbers that they have stopped reporting to investors.

The less information a company provides to investors, the more investors perceive it as riskier due to the lack of information. Therefore, as analysts, and as investors and professional analysts, we now have to make more estimates.

We need to rely on more guesswork. We can use information and conduct research to arrive at this estimate, but it remains far less accurate than if the administration provided this figure.

This does not guarantee that the company's goals will match what they announce, but at least it provides us with a point of reference from which we can start. Now, we don't have that number and we have to make more assumptions that are less likely to be accurate.

Thus, the risks become higher when the company does not disclose those figures.

To make matters worse, Netflix is withholding even more information. The engagement report, which they have been issuing twice a year , will become an annual report starting in the first quarter of 2027.

They say the goal is to keep investors focused on their core financial metrics, namely revenue and operating profit. This bothers me personally. I don't like it when the management team tries to direct my attention as an investor to certain numbers they want me to focus on.

Why don't you simply disclose your business information and leave me free to choose what interests me as an investor to focus on ? Don't tell me or try to direct me to the numbers you want me to look at, those numbers that might make your work look the way you want it to.

And I'm sure many investors feel the same way . They do not like to be told what to look at, or to be forced to look at other data by withholding information because the numbers they are used to seeing are not available.

Therefore, I don't think this is a positive step from Netflix, and I hope they can be discussed with or persuaded to go in the opposite direction. Instead of proceeding in the direction of removing information, which they seem to be heading towards , by deleting subscriber numbers and reducing this report to once a year instead of twice .

They are moving in the direction of providing less information to investors.

And I hope they will change course here and say, "You know what?" "This was not our intention, and we want to return to providing more facilities for investors interested in buying and owning our shares."

This does not appear to be the case, and I do not think this is a positive thing as a contributor. As an analyst , I neither like nor appreciate this move .

Well, for the entire year , they are expecting free cash flow of about $12.5 billion.

In April, their board approved an additional $25 billion share buyback, adding to their remaining $6.8 billion in purchase capacity. In the second quarter, they repurchased $4.7 billion worth of shares , the largest quarter of buybacks ever, and still have $27 billion remaining within their mandate.

This is something I greatly appreciate. This is something I completely agree with. I feel that these stocks are significantly undervalued . One reason it is undervalued is the strong negative sentiment among investors.

One of the wisest things the management team could do in this situation is to repurchase shares and reduce the number of outstanding shares. This will result in your profits being spread over a smaller number of shares, thus increasing earnings per share.

This is a wise move when you feel your shares are undervalued.

This is not a smart move when your stock is overvalued or full of hype and excitement, is it? but with a company like Netflix where investor sentiment is the opposite of what is happening with SpaceX and Tesla, where investors are not feeling as confident and enthusiastic, yet the company is still performing relatively well, with double-digit revenue growth, increased free cash flow, strong competitive advantages, and supportive industry winds, it is a good time to buy back shares.

I would like to see another quarter of around $5 billion in buybacks from Netflix when they announce their results on October 20, 2026. Their report is usually released between 1:00 and 1:30 PM Pacific Time .

Incidentally, I will be doing a live broadcast to cover those results when they are released, but it will be exclusive to channel members. So, if you are interested in attending Netflix's live earnings coverage, click the Join button below and get access to our channel membership program. We would love to see you at the event.

I have mentioned the negative sentiment of investors, and you can see that through several pieces of evidence. The most notable of these is the company's price-to-earnings ratio, which now stands at 18.55.

This is close to Netflix's all-time low trading price, especially when going back several years. You'll see that it's rarely traded at such a cheap valuation, considering the last few years .

This is despite the fact that the company’s operating profitability and cash flow from operations are approaching record levels. So, profits and cash flow are booming. This is going well .

The category that is suffering is revenue growth, which is slowing down, but the business has grown rapidly over the past decade, more than 5 times from about $9 billion in revenue in 2017, to $49 billion over the past 12 months.

I have also updated my fair value estimates for Netflix, and I feel that this stock is worth about $115 per share. You can buy it today for $70. I see a significant upside here of around 64% over the next 12 to 18 months,

but of course, those negative factors are still there . Consumer behavior, and the consumption of more short-form content, is certainly negative for Netflix, and investor sentiment is negative moreover, which is most likely a result of changing consumer behavior in addition to some management actions that investors viewed unfavorably.

However , there are still strong winds supporting digital broadcasting. More and more people are canceling cable and satellite subscriptions and switching to digital streaming instead.

This is accelerating this year with the availability of more sports content. Sports are one of the main reasons why people haven't switched from cable and satellite. Now, with more sports available, more people are turning to live streaming instead .

Netflix has over a decade of accumulated experience . This is one of my favorite things about Netflix, which is that they have spent more than a decade creating original content.

They have learned how to do it in a cost-effective way. They built a strong intellectual property portfolio during that period with works such as Bridgerton, The Squid Game, House of Cards, and others that I may forget to mention here, but they gained considerable experience and proved to investors that they knew how to do it.

In fact, I would argue that they are the best in the streaming world at finding content that the audience loves to watch. So, for all these reasons, I am very optimistic about Netflix.

It is the number one item in my investment portfolio.

However, do I think Netflix stock represents a buying opportunity? Should I buy Netflix stock before the company announces its earnings? Let me tell you what I think. Personally, I will not buy Netflix shares before the earnings announcement.

First of all , because it is already the largest asset in my investment portfolio. I want to add other shares before adding more Netflix shares. I already feel that I have secured the positive side.

If Netflix stock rises 20% after the earnings announcement, I already have a large position. I will indeed benefit from this rise.

First of all, because it is already the largest asset in my investment portfolio. I want to add other shares before adding more Netflix shares. Secondly, I don't see any catalyst in the upcoming earnings report that would push Netflix stock higher.

I mentioned that investor sentiment was negative, and I don't see anything changing that in the upcoming earnings release. The management team is withholding more information, unless they provide some insight into subscriber numbers, tell us they will be restoring subscriber figures, or perhaps announce a share buyback of $5 billion or more.

There isn't much I expect Netflix to announce in these quarterly results that will create growth here .

There isn't much I expect Netflix to announce in these quarterly results that will create growth here. So, if I am interested in Netflix stock and I do not already own it, I will approach it by allocating a maximum of 25% of my purchases before earnings and 75% after.

If I am risk-averse, I will wait until the company announces its quarterly results and then make a decision about whether or not to buy.

Revenue growth has slowed and I am concerned that when they announce, they may miss revenue estimates and then present forecasts for the next quarter in the single digits of 8% or less.

If they do that, it could trigger another round of Netflix stock sales, which might allow you to acquire the stock at a lower price.

Therefore, I am more concerned about the possibility of a decline here after the company announces its results than I am about the possibility of an increase. I already feel that I have protected the possibility of an upward move.

Regardless, this will be a very interesting report for me, given that it is my largest investment portfolio and ranks very high on my list of best stocks to buy. I'm looking forward to that live earnings session where I'll be covering the company's report and giving you my immediate reaction to those results. Mark your calendars if you're