Netflix Stock Drops Below $80: Is it a Good Time to Buy?

Netflix had a strong year in 2025, with double-digit revenue growth and expanding margins. Management is optimistic about 2026, expecting continued top-line growth and margin expansion. Despite this success, the stock price has dipped below $80, down 40% from its recent high.

In 2025, Netflix’s revenue climbed 16% to $45 billion, with over 325 million subscribers worldwide. The company’s growth was driven by a mix of pricing, subscriber growth, and a budding advertising business that contributed 3% of total revenue. Even with this growth, the stock has seen a 10% decline since the start of 2025.

The stock’s current price-to-earnings ratio is about 32, factoring in future growth expectations. Looking ahead, the forward price-to-earnings ratio stands at 26, considering analysts’ forecasts for the next 12 months. With expected revenue growth of 12-14% and expanding operating margins in 2026, Netflix’s outlook remains positive.

Competition remains fierce in the streaming industry, with Netflix acknowledging the challenges it faces. Management highlighted the intense competition from various leisure activities, including social media, video games, and other streaming services. As a result, the stock may not offer enough margin of safety given these competitive pressures.

While Netflix’s stock price may reflect some risks, there are concerns about its valuation given the competitive landscape. Investors should carefully consider these factors before deciding whether to buy shares of Netflix.