Netflix Stock Down 17%: Should You Buy After Parting Ways with Warner Bros. and Roku?
25 million paying members, helping it generate $13 billion in profit on $47 billion of trailing revenue. Despite recent challenges in securing deals with Warner Bros. and Roku, Netflix remains focused on investing in content production, with plans to spend $20 billion this year alone.
Some may view Netflix’s failure to win these bidding wars as a sign of a weakening growth story, but Wall Street might not be seeing the whole picture. The company is strategically choosing not to engage in bidding wars, opting instead for disciplined capital allocation. Netflix understands the value of its content spending and believes that investing in its own content will yield a higher return in the long run. This approach is reminiscent of the investment philosophy of Warren Buffett.
Netflix still has room to grow, with a small share of total TV viewing time and the potential for as many as 800 million subscribers. Revenue for the first quarter grew by 16% year over year, showing solid numbers in a competitive market. The company is expanding its content library to include live events and video podcasts, aiming to capture more of people’s viewing time.
Trading at just 21 times 2026 earnings estimates, Netflix presents an attractive investment opportunity. With a strong brand, over 30% operating margin, and continued double-digit revenue growth, the stock is viewed as undervalued by some investors. Despite recent setbacks, the company’s disciplined approach to capital allocation and growth potential make it a solid investment option for those looking for long-term growth opportunities.
Before making any investment decisions, it’s important to consider all factors and conduct thorough research. While Netflix may have missed out on some recent deals, its overall growth story and potential for future success make it an intriguing option for investors looking to capitalize on the streaming entertainment industry.
