Bill Ackman Says Long-Term Investors Can Benefit From a Broken Market. Here’s the Price I’d Pay for Netflix Stock.

Bill Ackman isn’t impressed by how the stock market has been acting recently. On Tuesday, Nov. 3, the founder of Pershing Square Capital Management told CNBC’s “Squawk Box” that markets seem broken to him sometimes, with stocks trading at prices he can’t understand. But he also saw an upside for one type of investor.

Long-term investors can benefit when they get to buy shares at prices that are way too low, Ackman said.

According to CNBC, the stocks he’s especially bullish on include Netflix (NFLX +4.68%), where he reported a stake in August.

And Netflix has definitely gotten cheaper. Shares are near $66 as of this writing, about half the $133.91 record close they set in June 2025 (split-adjusted, after last November’s 10-for-1 stock split).

Has Netflix stock dropped that far, then?

I don’t think it’s there yet. But I think it’s getting close.

Netflix keeps getting more profitable

Netflix’s third-quarter earnings per share climbed 49% from a year ago, to $0.87, and operating income grew 37% to around $4.5 billion, for an operating margin of 34.6%. Granted, both numbers got help from an easy comparison. In the year-ago quarter, Netflix booked an expense of around $619 million linked to a dispute with Brazilian tax authorities, which the company said cut its operating margin that quarter by over 5 percentage points.

Yet the business grew its profits without that help. Add the Brazil charge back to the third quarter of 2025, and Netflix’s operating income climbed around 15% year over year, with its operating margin about a point higher than the year before.

Buybacks are helping, too. Netflix spent $4.8 billion repurchasing 63.9 million shares in the third quarter, its biggest quarter of buybacks ever. And its diluted share count has dropped around 3% year over year.

Sales are the weak spot. Revenue growth reached 17.6% in the fourth quarter of 2025 and has slowed every quarter since, to 16.2%, 13.4%, and then 11.8% last quarter.

Management’s guidance is for around 11.5% growth in the fourth quarter. Netflix also cut its 2026 ad revenue forecast to around $2.7 billion from about $3 billion, citing a slower-than-expected rollout of some ad features.

A one-time fee is inflating this year’s earnings

In the first quarter, Netflix got a $2.8 billion termination fee linked to its Warner Bros. acquisition that fell through. Its first-quarter earnings per share landed at $1.23, far above the company’s own pre-quarter forecast of $0.76.

Through September, Netflix earned $2.90 per share, and its fourth-quarter guidance is for another $0.67. That’s around $3.57 for the year. Plug in the $0.76 forecast for the first quarter’s reported figure, though, and 2026 comes to around $3.10 — a rough stand-in for what the business earned without the fee.

On average, analysts expect Netflix to earn around $3.77 a share in 2027, about 22% above this year’s number without the fee.

I think the estimate is reachable if margins keep widening. But it might get tougher every quarter that revenue growth slows, because more of the earnings growth then has to come from margin gains and buybacks.

Valuation: close, but not a bargain yet

At around $66, Netflix stock costs about 18 times earnings on analysts’ average estimate for 2027. For a company still widening its operating margin, the stock arguably looks reasonable. But reasonable isn’t the same as a bargain.

I’d pay about 16 times the 2027 earnings estimate, or around $60 a share.

The reason is room for error. If Netflix’s 2027 earnings fell 10% below the estimate, a $60 stock would still cost about 18 times earnings — the same price-to-earnings ratio investors pay now for the full estimate.

After all, a 10% miss isn’t hard to imagine for a company whose sales growth has slowed for three straight quarters.

This is a slightly tougher bar than I used last week. On Oct. 28, I put Netflix on a list of stocks worth owning through 2030, and on Oct. 30, I said I’d rather own Apple. Neither view has changed. But owning a company through 2030 and picking a price for new shares today are two different calls.

Netflix’s profits keep climbing even as its stock price has been cut in half. At about $60, or around 10% under where shares trade as I write, I’d be glad to open a position and add to it slowly. At $66, the stock isn’t quite there.