Netflix Down 46%: Buy at 28x Free Cash Flow
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Netflix shares have dropped roughly 46% since peaking last summer, weighed down by slowing earnings growth and management's decision to disclose less viewer engagement data.
- Netflix is on track to produce $12.5 billion in free cash flow this year and currently trades at 28 times FCF, a multiple the author argues compares favorably to legacy media peers.
- The streamer has 325 million global subscribers and is lifting revenue per membership through price hikes and an ad tier generating roughly $3 billion in 2026, up from $1.5 billion in 2025.
- Netflix spends about $19 billion annually on content, with management using a fixed operating margin target to consistently expand margins and translate content spend into cash flow growth.
- Netflix repurchased $11.5 billion in shares during the first half of 2026 and still has $27 billion remaining under its buyback authorization, which the author calls 'particularly appealing at the current price.'
- Live events don't account for significant watch time but drive subscriber sign-ups, helping fuel the rapid growth of the ad-supported tier, according to the article.
Why it matters: The bull-bear split on Netflix is unusually sharp within the same publication: alongside this buy thesis, Motley Fool has also run 'The Days of Rapid Growth Are Over' and 'Prediction: Netflix Stock Won't Double by 2031.' At $71.71 and 28x FCF, Netflix pays a media-sector price without the linear-network drag, and the $27 billion buyback warchest gives management a direct lever to compound per-share value if FCF keeps climbing from $12.5 billion.
