Vandita Jadeja
5 min read
Quick Read
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NFLX beat Q3 EPS estimates and widened operating margin to 34.6% from 28.2% yet still dropped 5.31% on earnings day as ad revenue guidance was cut.
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Netflix’s 29.49% operating margin towers over Disney (DIS) at 14.6% and Spotify (SPOT) at 12.8%, justifying its valuation premium between their 16x and 49x P/E multiples.
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Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and Netflix didn’t make the cut. Enter your email to see the names that beat NFLX. The report is free. Enter your email and see if any of your stocks made the cut.
Our 24/7 Wall St. price target for Netflix (NASDAQ:NFLX) is $78.99 over the next 12 months. Shares trade at $67.13, so the target means 17.7% upside. We rate Netflix a buy with high confidence.
24/7 Wall St. Price Target Summary
After a year of questions, the market is pricing Netflix like a franchise whose growth is running out. What we see is a business still growing revenue at double digits, widening its margins and buying back stock at a record pace.
Sentiment and fundamentals have drifted apart, and that is why our model remains constructive even after expectations were revised hard.
A 45.92% Slide That Ignored an Earnings Beat
Netflix is down 4.87% over the past week, 8.49% over the past month, 5.09% over the past quarter and 28.4% year to date. The stock has lost 45.92% over one year. The shares are 42.5% below their 52-week high of $116.73 and just 4.7% above the $64.10 low.
Third-quarter results on October 20 show how wide that gap has become. EPS of $0.87 beat the $0.8229 estimate. Revenue of $12.874B (+11.85% YoY) came in just short of the $12.878B consensus. Operating margin widened to 34.6% from 28.2%.
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Even so, shares fell 5.31% on earnings day. Netflix cut its 2026 ad revenue outlook to about $2.70B from $3.00B, and co-CEO Ted Sarandos admitted, “We do need better execution in the U.S.” Today the stock is up 3.21%.
