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NFLX Netflix

entertainment · valued with sonnet medium conviction · 2026-06-25

STRONG SELL
wonderful · 88 ▟ wide moat circle of competence: in ✓ would own for a decade
Owner-earnings value$43.78
Price$71.84
Margin of safety -39.1%

Unrivaled streaming scale flywheel; ad tier optionality makes the 8% growth case look conservative

The business

Netflix sells recurring subscriptions to a global streaming platform carrying licensed and original films, series, and live events. A newer ad-supported tier is layering advertising revenue on top of subscription fees. Content is the dominant cost, amortized over each title's commercial life rather than expensed as capex.

Quality gate · 88/100

Returns on capital 27.0/30
Consistency 18.9/22
Margins / pricing power 13.3/16
Balance sheet 14.4/16
Cash conversion 9.2/10
Capital allocation 5.6/6
Median ROIC20.0%
Gross margin49.0%
Net debt / EBITDA0.2x
FCF conversion84%
Share count / yr-1.8%
Profitable years4/4

Moat & management

Moat ▟ wide moat
Sourcescale
Trajectorystable
Managementexcellent

300M+ paying households let Netflix amortize content costs over a base no rival can match, so it greenlights more and better programming per subscriber dollar than anyone else. The data flywheel — viewing behavior feeds recommendation algorithms feeds content investment decisions — is structurally hard to replicate at smaller scale. Switching costs are genuinely low, which is the main check on calling this a compounding moat rather than a dominant one.

Sarandos and Peters have executed price increases, the password-sharing crackdown, and the ad tier without breaking subscriber trust; net leverage at 0.16x EBITDA and a steady buyback program (~2% annual share reduction) reflect owner-operator discipline over empire-building.

Owner-earnings inputs

Owner earnings (TTM)11.89B
Owner-earnings yield3.9%
Free-cash-flow yield3.9%
Growth used (normalized)8.0%
Market-implied growth (reverse DCF)9.0%
Terminal growth3.0%
Discount rate (hurdle)11.1%

Projected owner earnings

YrOwner earningsGrowthPV
112.85B 8.0%11.56B
213.80B 7.4%11.18B
314.75B 6.9%10.75B
415.69B 6.3%10.29B
516.59B 5.8%9.80B
617.46B 5.2%9.28B
718.27B 4.7%8.74B
819.03B 4.1%8.19B
919.70B 3.6%7.63B
1020.29B 3.0%7.08B

Key risks

  • Live sports rights inflation could structurally compress margins — the NFL and similar deals are winner-takes-most auctions with escalating prices
  • Amazon and Apple subsidize streaming losses from unrelated profit pools, creating permanently asymmetric competition that cannot be competed away
  • Core market saturation in US/Canada/UK means unit growth stalls; ARPU-only growth compounds slower and hits consumer price resistance

Catalysts

  • Ad-tier CPMs mature and ARPU eclipses the standard subscription tier, expanding the earnings power of the existing subscriber base
  • Live programming drives measurable churn reduction and raises willingness-to-pay, supporting above-CPI annual price increases

Recent news

score · 8 articles

  • Worried About Amazon’s AI Bill? What If It’s Already Paid For?
  • Is Omnicom (OMC) Quietly Recasting Its Competitive Edge Through Netflix And Acxiom’s AI Ad Alliance?
  • Netflix Struggles to Shift the Narrative After Warner Bros. Fiasco
  • Netflix Unveils New Horror Game to Jumpstart Interactive Offerings
  • Citizens Upholds its Market Perform Rating for Netflix (NFLX)
  • Netflix Will Trade at This Price in 2028
  • Update: US Equity Futures Fall Pre-Bell Amid Broad Tech Sell-Off, US-Iran Peace Negotiations
  • This Could Be the Real Reason Netflix Stock Continues to Struggle

⚠ maintenance capex ≈ min(capex, D&A), capped at FCF

History

DateQualityPriceValueMoSRating
2026-10-28 89 $62.52 $48.86 -21.9% HOLD
2026-10-27 89 $63.90 $48.86 -23.5% HOLD
2026-10-26 88 $65.85 $46.07 -30.0% HOLD
2026-10-23 88 $67.05 $46.07 -31.3% HOLD
2026-10-22 88 $65.04 $46.07 -29.2% HOLD
2026-10-21 88 $68.69 $46.07 -32.9% HOLD
2026-10-20 88 $69.85 $46.07 -34.0% HOLD
2026-10-19 88 $70.53 $46.07 -34.7% HOLD
2026-10-16 88 $72.61 $46.07 -36.5% HOLD
2026-10-15 88 $70.57 $46.07 -34.7% HOLD
2026-10-14 88 $70.46 $46.07 -34.6% HOLD
2026-10-13 88 $70.61 $46.07 -34.8% HOLD
2026-10-12 88 $70.30 $46.07 -34.5% HOLD
2026-10-09 88 $71.57 $46.07 -35.6% HOLD
2026-10-08 88 $69.70 $46.07 -33.9% HOLD
2026-10-07 88 $68.69 $46.07 -32.9% HOLD
2026-10-06 88 $67.50 $46.07 -31.7% HOLD
2026-10-05 88 $67.06 $40.75 -39.2% HOLD
2026-10-02 88 $67.85 $40.75 -39.9% HOLD
2026-10-01 88 $69.58 $40.75 -41.4% HOLD
2026-09-30 88 $70.30 $40.75 -42.0% HOLD
2026-09-29 88 $69.23 $40.75 -41.1% HOLD
2026-09-28 88 $71.15 $40.75 -42.7% HOLD
2026-09-25 88 $71.72 $40.75 -43.2% HOLD
2026-09-24 88 $71.36 $40.75 -42.9% HOLD
2026-09-23 88 $73.36 $40.75 -44.5% HOLD
2026-09-22 88 $73.36 $40.75 -44.5% HOLD
2026-09-21 88 $71.79 $40.75 -43.2% HOLD
2026-09-18 88 $75.31 $40.75 -45.9% HOLD
2026-09-17 88 $76.41 $40.75 -46.7% HOLD
2026-09-16 88 $77.90 $40.75 -47.7% HOLD
2026-09-15 88 $80.32 $40.75 -49.3% HOLD
2026-09-14 88 $77.40 $42.34 -45.3% HOLD
2026-09-11 88 $76.01 $42.34 -44.3% HOLD
2026-09-10 88 $76.03 $42.34 -44.3% HOLD
2026-09-09 88 $76.77 $42.34 -44.8% HOLD
2026-09-08 88 $78.25 $42.34 -45.9% HOLD
2026-09-07 88 $78.25 $42.34 -45.9% HOLD
2026-09-04 88 $82.67 $42.34 -48.8% HOLD
2026-09-03 88 $82.73 $42.34 -48.8% HOLD
2026-09-02 88 $80.81 $42.34 -47.6% HOLD
2026-09-01 88 $81.05 $42.34 -47.8% HOLD
2026-08-31 88 $81.72 $42.34 -48.2% HOLD
2026-08-28 88 $79.84 $42.34 -47.0% HOLD
2026-08-27 88 $81.46 $42.34 -48.0% HOLD
2026-08-26 88 $82.23 $42.34 -48.5% HOLD
2026-08-25 88 $80.01 $42.34 -47.1% HOLD
2026-08-24 88 $79.59 $42.76 -46.3% HOLD
2026-08-21 88 $80.14 $42.76 -46.6% HOLD
2026-08-20 88 $80.22 $42.76 -46.7% HOLD
2026-08-19 88 $77.77 $42.76 -45.0% HOLD
2026-08-18 88 $78.16 $42.76 -45.3% HOLD
2026-08-17 88 $78.16 $42.76 -45.3% HOLD
2026-08-14 88 $78.24 $42.76 -45.4% HOLD
2026-08-13 88 $74.21 $42.76 -42.4% HOLD
2026-08-12 88 $74.79 $42.76 -42.8% HOLD
2026-08-11 88 $76.29 $42.76 -44.0% HOLD
2026-08-10 88 $74.14 $42.76 -42.3% HOLD
2026-08-07 88 $73.69 $42.76 -42.0% HOLD
2026-08-06 88 $74.20 $42.76 -42.4% HOLD
2026-08-05 88 $73.57 $42.76 -41.9% HOLD
2026-08-04 88 $71.71 $45.12 -37.1% HOLD
2026-08-03 88 $71.71 $45.12 -37.1% HOLD
2026-07-31 88 $73.17 $45.12 -38.3% HOLD
2026-07-30 88 $73.63 $45.12 -38.7% HOLD
2026-07-29 88 $70.40 $45.12 -35.9% HOLD
2026-07-28 88 $70.40 $45.12 -35.9% HOLD
2026-07-27 88 $68.89 $45.12 -34.5% HOLD
2026-07-24 88 $68.89 $45.12 -34.5% HOLD
2026-07-23 88 $68.53 $45.12 -34.2% HOLD
2026-07-22 88 $68.67 $45.12 -34.3% HOLD
2026-07-21 88 $67.60 $45.12 -33.3% HOLD
2026-07-20 88 $68.95 $45.12 -34.6% HOLD
2026-07-17 88 $74.35 $45.12 -39.3% HOLD
2026-07-16 88 $73.68 $45.12 -38.8% HOLD
2026-07-15 88 $73.53 $45.12 -38.6% HOLD
2026-07-14 88 $73.83 $46.60 -36.9% HOLD
2026-07-13 88 $73.37 $46.60 -36.5% HOLD
2026-07-10 88 $75.47 $46.60 -38.3% HOLD
2026-07-09 88 $75.59 $46.60 -38.4% HOLD
2026-07-08 88 $76.18 $46.60 -38.8% HOLD
2026-07-07 88 $76.02 $46.60 -38.7% HOLD
2026-07-06 88 $77.65 $46.60 -40.0% HOLD
2026-07-03 88 $77.65 $46.60 -40.0% HOLD
2026-07-02 88 $74.19 $46.60 -37.2% HOLD
2026-06-25 88 $71.84 $43.78 -39.1% STRONG SELL
2026-06-23 88 $72.82 $43.28 -40.6% STRONG SELL