2026 has been a rough year for Netflix (NASDAQ:NFLX). The streaming stock is down 31% year-to-date, including a 6% slide following its earnings report on Tuesday.
Netflix’s sell-off isn’t a mystery. The company has struggled with viewer engagement, as viewing hours were up just 2% through the first half of the year, and it has lost viewing share to its rivals, including YouTube, the market leader. According to data from Nielsen, Netflix’s viewer share fell from 8.8% to 7.8% in the year ending July.
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However, while Netflix’s growth is slowing, it’s delivering solid results. Revenue rose 11.8% to $12.9 billion in the third quarter, and earnings per share improved from $0.59 to $0.87, though that was partly due to lower content spending because of timing.
More importantly, based on a comparison with its streaming peers, Netflix is outgrowing them and trades at a relatively attractive price.
Image source: Netflix.
Netflix vs. the competition
There aren’t any other pure-play streaming stocks on the market, but that should be a reminder of its competitive advantage as the company is outgrowing rivals like Walt Disney Co, Skydance, and Comcast. The chart below shows recent revenue growth rates for those stocks, and includes Warner Bros Discovery before its acquisition by Paramount Skydance.
NFLX Revenue (Quarterly YoY Growth) data by YCharts
As you can see, all of Netflix’s competitors are growing more slowly than it is, and all three of them have legacy businesses in cable networks, theatrical films, and broadband internet in the case of Comcast.
That gives Netflix an advantage as it can reinvest all of its profits into its streaming business and doesn’t have to absorb the headwinds from the declining legacy businesses.
You would think that a company that was bigger than its rivals and outgrowing them would be trading at a higher multiple, but that’s not the case, as the chart below shows.
NFLX PE Ratio data by YCharts
The newly formed Skydance is not unprofitable and is unlikely to be anytime soon, given its roughly $80 billion in debt. Disney has a similar P/E ratio to Netflix, while Comcast trades in value-stock range, which is due to expectations that its revenue will fall due to the shrinking cable business and challenges in its broadband division.
