Is Netflix a Buy at $63?
At about $63, Netflix is a high-quality business at a fair-looking price, not a clear bargain. The stock is down about 53% from its June 2025 peak of $134.12 and sits at a two-year low after the October 20 report, where profit beat but guidance disappointed.
- It trades near 18 times forward earnings with a free-cash-flow yield near 4.6% on the company's own 2026 forecast, while revenue growth has slowed from 16.2% to 11.8% in three quarters.
- This site's DCF still puts the price about 35% above its neutral value, so the stock is only cheap if growth holds near 12% and margins keep rising.
This is educational analysis, not investment advice.
Why has Netflix stock fallen to $63?
| Date | Event | Price |
|---|---|---|
| June 30, 2025 | Split-adjusted record intraday high | $134.12 |
| October 20, 2026 | Regular-session close before the Q3 report | $68.69 |
| October 20, 2026 | After hours, on the report | $64.72 (down 5.8%) |
| October 21, 2026 | Close, a two-year low | $65.04 (down 5.3%) |
| Late October 2026 | Quote pages show new lows | About $63 to $64 |
Netflix's split-adjusted share price from its peak to about $63. The 10-for-1 split took effect on November 14, 2025.
The drop came from guidance, not from the quarter itself: Netflix cut its 2026 advertising forecast, guided fourth-quarter profit below what analysts expected and said free cash flow would be lower than planned. Revenue growth has also slowed for three quarters in a row.
What did Netflix report for the third quarter of 2026?
| Measure | Q3 2026 | Compared with |
|---|---|---|
| Revenue | $12.87 billion, up 12% | Up 11% excluding currency effects |
| Operating income | $4.46 billion, up 37% | Operating margin 34.6% against 28.2% |
| Net income | $3.66 billion | Diluted EPS $0.87 against $0.59, a 49% rise |
| Free cash flow | $2.88 billion | $2.66 billion a year earlier |
| Share buybacks | $4.8 billion, 63.9 million shares | The largest quarter of repurchases ever |
| Gross debt | About $15.3 billion | About $7.1 billion net of cash |
Management said the profit beat came mainly from the timing of expenses plus a slight revenue upside, so it is not a new run rate. The prior-year quarter also included a Brazil tax charge, which flatters the 37% operating income growth. The letter says churn improved on last year and was better than forecast, and that the response to 2026 price increases matched expectations.
Why did the stock fall when profit rose?
| Guidance item | Before | Now |
|---|---|---|
| Q4 revenue | About $13.5 billion expected by analysts | $13.4 billion |
| Q4 diluted EPS | About $0.73 expected by analysts | $0.67 |
| Q4 operating margin | 24.5% a year earlier | 26.0%, with about 1.2 points lost to headcount cuts |
| 2026 revenue | $51.0 to $51.4 billion range | $51.1 billion, growth of 13% |
| 2026 operating margin | 31.5% | 31.5%, unchanged |
| 2026 advertising revenue | About $3.0 billion | About $2.7 billion |
| 2026 free cash flow | About $12.5 billion | About $12.0 billion, mainly on a Q4 real estate transaction |
Netflix revenue growth by quarter. The first three figures are from an INDmoney analysis of the reports and the Q4 figure is the company's guidance.
Three things worry investors: the slowest revenue growth in about three years, the second cut in a row to a key forecast (this time advertising, which Netflix blames on a slightly slower rollout of ad product capabilities), and a restructuring that included about 1,000 job cuts and changes at the head of content and film, as reported by one analysis. The letter itself also acknowledges investor concern about view hours growth.
Is Netflix cheap at $63?
How far above this site's neutral DCF value the price still is. The stock is down about 53% from its peak, but the DCF needs growth near 12% to call it cheap.
The weekly data on this site was last refreshed on October 23 to 24, when the stock was $65.85. The table below rescales the price-based figures to $63, so they are estimates, not live quotes.
| Measure | At about $63 | What it tells you |
|---|---|---|
| Market value | About $262 billion | Down from about $274 billion at the weekly price |
| Trailing / forward P/E | 17.8 / 18.4 | Trailing is flattered by a one-time Q1 gain (see below) |
| Free cash flow yield, 2026 forecast | About 4.6% | $12.0 billion of guided free cash flow over market value |
| Buyback capacity | $22.3 billion, about 8.5% of market value | Q3 buybacks averaged about $75 a share |
| Return on equity / net margin | 50% / 30% | Trailing twelve months, includes the Q1 gain |
| Debt to equity / interest coverage | 0.52 / 22 times | Debt is modest against earnings |
| Price against this site's neutral DCF | About 35% above | Neutral value near $47, a margin of safety of about -35% |
| Growth the price implies | About 16.7% a year at $65.85 | A little less at $63, fading to 2.5% by year 10; the baseline starts at 8% |
Interest and other income was about $2.9 billion in the first nine months of 2026 against only $43 million in Q3, and one source ties the first-quarter amount to a $2.8 billion Warner Bros.-related termination fee. That is not recurring income, so the trailing P/E looks lower than the business's normal earnings power. The forward P/E is the cleaner measure, and the DCF treats the stock as pricey because it asks for faster growth than its baseline. What growth does a share price imply? explains the method and margin of safety explains the DCF gap.
What are the bull and bear cases for Netflix?
| The bull case | The bear case |
|---|---|
| Profit is growing faster than revenue: operating income is guided up more than 20% in 2026 on 13% revenue growth | Revenue growth fell from 16.2% to 11.8% in three quarters and is guided to about 11.5% next |
| Churn is improving and price rises are landing as expected | Advertising was cut to $2.7 billion from $3.0 billion, and management has now trimmed key forecasts more than once |
| Free cash flow of about $12 billion funds $22.3 billion of buyback capacity, about 8% of the company's value | Buybacks do not set a floor under the price, and the $4.8 billion bought in Q3 averaged about $75 a share |
| Very high returns on capital and an earnings quality rating of Strong on this site | Content obligations are $25.2 billion and cash content spend runs about 1.1 times its amortisation |
| India, where view hours grew 24% and paid additions hit a record, and ads coming to 15 more countries in 2027 | The restructuring and executive changes show the US business needs fixing, and 2027 guidance only arrives in January |
Wall Street is still positive: 57 analysts rated it this month, with 43 at buy or strong buy, 13 at hold and 1 at sell (an average of 3.98 out of 5, Finnhub).
How does Netflix compare with other media and tech stocks?
| Stock | Forward P/E | Free cash flow yield | 1-year price change |
|---|---|---|---|
| Netflix (NFLX), at $63 | 18.4 | 4.6%, 2026 guide | About -44% |
| Disney (DIS) | 13.9 | 5.4% | -1% |
| Comcast (CMCSA) | 6.3 | 21.2% | -18% |
| Alphabet (GOOGL) | 21.4 | 1.6% | +27% |
| Amazon (AMZN) | 22.8 | 0.6% | +14% |
Forward P/E from this site's weekly data of October 23 to 24, 2026, with Netflix rescaled to $63.
Netflix is no longer priced like a growth stock, but it is not priced like a cable company either: Comcast trades near 6 times forward earnings with revenue shrinking, which is what the market pays for decline. Comcast at 7x earnings shows how that gap looks from the other side.
What should you watch next?
| Watch | What it would show |
|---|---|
| Fourth-quarter results and 2027 guidance, due in January (check Netflix's investor page for the date) | Whether growth steadies near 11% to 12% and what the restructuring saves |
| Advertising revenue against the $2.7 billion forecast | Whether the ad tier is a real second engine, with 15 new countries from March 2027 |
| View hours and churn | The letter says it seeks to accelerate view hours growth, which management acknowledged investors are watching |
| Operating margin against the 31.5% forecast | Whether profit keeps growing faster than revenue |
| Buyback pace and the Q4 debt maturity of about $1 billion | How management uses cash with the stock at a two-year low |
If you want to test other stocks on the same lens, the Compounders at a Fair Price page runs four checks (capital-light growth, real earnings, cash to owners and a fair PEG) on every stock this site tracks, and Netflix currently clears all four.
Sources
- Netflix Q3 2026 shareholder letter (SEC, October 20, 2026): results, cash flow, debt, buybacks, guidance
- INDmoney: Netflix Q3 2026 earnings analysis (October 21, 2026): price levels, analyst consensus comparisons, layoffs and executive changes, the Warner Bros.-related fee
- Motley Fool: Netflix is down 51% from its high (October 25, 2026): late-October quote near $64
- Netflix on this site: ratios, DCF, analyst ratings and filters, October 23 to 24, 2026
The $63 price is the level at the time of writing, not a verified closing price: quote pages showed about $63.87 to $63.98 in recent sessions, and the peers and ratios on this site come from the weekly data. The Q1 gain, headcount figures, executive changes and consensus comparisons come from the secondary source above, not the letter. The Q4 revenue growth rate is the company's guidance. This is educational content, not investment advice.
The $2.8 billion Warner Bros.-related fee mentioned above came from the Paramount Skydance deal, whose debt is covered in Can Skydance handle its debt if rates rise?
Netflix stock FAQ
Is Netflix stock a buy at $63?
It depends on growth. At about $63 it trades near 18 times forward earnings with a free-cash-flow yield near 4.6%, but this site's DCF still puts it about 35% above neutral value, so it needs growth near 12% and rising margins. This is not investment advice.
Why did Netflix stock fall after Q3 2026 earnings?
Profit beat, but Netflix guided Q4 earnings per share to $0.67 against about $0.73 expected, cut its 2026 advertising forecast to $2.7 billion from $3.0 billion and lowered free cash flow guidance to $12.0 billion.
How much is Netflix down from its high?
About 53% from its split-adjusted peak of $134.12 on June 30, 2025, at a price near $63.
How fast is Netflix growing?
Third-quarter revenue grew 12% to $12.87 billion, down from 16.2% in the first quarter, and the fourth quarter is guided to about 11.5%. Operating income is guided to grow more than 20% in 2026.
Is Netflix still buying back stock?
Yes. It repurchased $4.8 billion in Q3, its largest quarter ever, and has $22.3 billion of capacity left.