Netflix Stock Down 42% High, Earnings Due July 16: Buy Before Report?

Netflix’s upcoming second-quarter earnings report on July 16 has investors on the edge of their seats. Despite the company’s impressive growth trajectory, with revenue, profits, and its advertising business all on the rise, the stock price has taken a significant hit, down 42% from its peak last year. This disconnect raises questions for potential investors: is now the right time to buy?

In the first quarter of 2026, Netflix reported a 16% year-over-year revenue increase, reaching $12.25 billion. This growth was driven by a combination of rising membership numbers, a price hike, and a burgeoning advertising segment. With over 325 million paid memberships and an audience nearing 1 billion, Netflix’s reach is extensive. The company’s ad revenue is also expected to double to $3 billion this year, supporting its goal of increasing revenue per member without relying solely on subscription fees.

Despite these positive indicators, the stock has faced challenges. The decline can be attributed to high market expectations at the beginning of 2025 and a stalled acquisition deal with Warner Bros. Discovery. However, with these obstacles in the past, Netflix now presents a story of a robust business trading at a discounted rate.

From a valuation standpoint, Netflix is trading at around 25 times earnings, offering a more reasonable price point compared to its peak valuation. The gradual de-rating of the stock over the past year has positioned it as a more attractive option for long-term investors. Although risks remain, including heavy competition in the streaming space and the uncertainty of earnings reports, the current valuation suggests a potential entry point for those interested in the company’s long-term growth prospects.

When considering buying stock in Netflix, it’s essential to evaluate the company’s track record and growth potential. The Motley Fool Stock Advisor team has identified top stocks for investors, indicating that while Netflix may not be a part of their current selection, there are other promising options worth exploring. With a history of outperforming the market and generating substantial returns, following expert advice can provide a strategic advantage for investors looking towards the future.

As Netflix prepares to report its earnings on July 16, potential investors should weigh the company’s growth prospects against the risks associated with market fluctuations and competitive pressures. While short-term gains may be uncertain, long-term investors may find the current price point appealing for starting or adding to their position in Netflix. Remember, investing is a personal decision, and it’s essential to conduct thorough research and consider your own financial goals before making any investment choices.