Netflix (NFLX) AI Stock Analysis

• Market Cap: $329.50B
• Dividend Yield: N/A
• Average Volume (3M): 46.99M
• Price to Earnings (P/E): 32.7
• Beta (1Y): 1.19
• Revenue Growth: 15.49%
• EPS Growth: 35.54%
• Country: US
• Employees: 14,000
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 0.56
• Shares Outstanding: 4,222,162,000
• 10 Day Avg. Volume: 38,496,469
• 30 Day Avg. Volume: 46,993,549
• PEG Ratio: 1.33
• Price to Book (P/B): 14.90
• Price to Sales (P/S): 8.78
• P/FCF Ratio: 41.91
• Enterprise Value/Market Cap: 1.25
• Enterprise Value/Revenue: 9.15
• Enterprise Value/Gross Profit: 18.86
• Enterprise Value/Ebitda: 13.66
• 1Y Price Target: $114.55
• Price Target Upside: 38.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 37
• EPS Forecast (FY): 3.13
• Revenue Forecast (FY): $51.16B

• Rating: 76 Outperform
• Price Target: $96.00 ▲(16.08% Upside)
• Action: Reiterated Date: 02/28/26
• Date: Action: Reiterated 02/28/26

The score is driven primarily by strong financial performance (high margins and robust free cash flow) and a positive earnings outlook (double-digit 2026 revenue growth guidance and margin expansion). These strengths are partly offset by weaker technicals (below key moving averages with negative MACD) and a relatively high P/E with no dividend support.

Positive Factors

Strong cash generation

High and recurring operating cash flow (~$10.1B TTM) and strong free cash flow (~$9.5B TTM, growing ~5.5%) provide durable internal funding for content, product and strategic investments, lowering reliance on external financing and supporting long‑term capital allocation and resilience.

High and expanding profitability margins

Sustained high gross (~48%), operating (~30%) and net (~24%) margins reflect structural economics around scale, content differentiation and pricing power, enabling reinvestment in originals and product while expanding operating leverage even as top‑line growth moderates.

Ad and product diversification with large TAM

Rapid ad revenue scaling (2.5x in 2025, guide to ~$3B in 2026) plus investments in ad tech, games and live events materially diversify revenue streams; combined with under‑10% TV time penetration, this provides durable multi‑year upside and less reliance on subscriber growth alone.

Negative Factors

Sizable absolute debt level

Despite improved leverage metrics, roughly $14.5B of absolute debt can limit strategic flexibility on big content spends or future M&A, heighten interest‑rate and refinancing exposures, and constrict the buffer if operating cash generation or margins deteriorate.

Modest engagement / view‑hours growth

Only ~2% view‑hours growth in 2025 signals slower engagement expansion, limiting organic time‑share and subscriber upside; this structural softness forces heavier reliance on pricing, ad monetization, or inorganic moves to drive meaningful long‑term revenue gains.

M&A regulatory and integration risk (Warner deal fallout)

Pursuit of the Warner Bros. transaction introduced material regulatory and integration risk; the deal's termination (and $2.8B fee receipt) underscores execution uncertainty, canceled financing commitments and ongoing regulatory scrutiny that can distract management and affect strategy execution.

Netflix Business Overview & Revenue Model

Company Description

Netflix, Inc. provides entertainment services. It offers TV series, documentaries, feature films, and mobile games across various genres and languages. The company provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, television set-top boxes, and mobile devices. It also provides DVDs-by-mail membership services in the United States. The company has approximately 222 million paid members in 190 countries. Netflix, Inc. was incorporated in 1997 and is headquartered in Los Gatos, California.

How the Company Makes Money

Netflix generates revenue primarily through its subscription-based model, where users pay a monthly fee to access a vast library of content. The company offers several subscription tiers, each varying in price based on features such as the number of screens that can stream simultaneously and the availability of high-definition content. Additionally, Netflix invests significantly in producing original content, which attracts and retains subscribers, thereby driving revenue growth. The company also benefits from strategic partnerships with smart TV manufacturers, mobile carriers, and other platforms that increase its visibility and subscriber base. While advertising revenue has been introduced in recent years through ad-supported subscription tiers, the core of Netflix's revenue remains its subscription fees.

Netflix Financial Statement Overview

Summary

High-quality profitability and cash generation: ~48% gross margin, ~30% operating margin, ~24% net margin, with strong TTM operating cash flow (~$10.1B) and free cash flow (~$9.5B). Balance sheet leverage has improved (debt-to-equity ~0.56), but absolute debt remains sizable (~$14.5B) and recent revenue growth is modest (~4%), which tempers the score.

Income Statement

TTM (Trailing-Twelve-Months) results show strong profitability with gross margin ~48%, operating margin ~30%, and net margin ~24%. Earnings have scaled materially versus 2022–2024 as margins expanded steadily. The main weakness is that growth appears modest (TTM revenue growth ~4% after mid‑teens growth in 2024), implying more of a profitability-driven story than a high-growth one.

Balance Sheet

Leverage is moderate and improving: debt-to-equity declined from ~1.47 (2020) to ~0.56 in TTM (Trailing-Twelve-Months), alongside rising equity. Returns on equity are very strong (TTM ~42%), reflecting excellent profit generation. The key risk is that total debt remains sizable in absolute terms (~$14.5B TTM), which can limit flexibility if operating conditions weaken.

Cash Flow

Cash generation is strong: TTM (Trailing-Twelve-Months) operating cash flow (~$10.1B) and free cash flow (~$9.5B) are both high, with free cash flow growing ~5.5%. Free cash flow tracks net income closely (TTM ~0.94x), indicating earnings quality is solid. A noted weakness is historical volatility (notably weak/free cash flow negative in 2021 and low operating cash conversion in 2022), even though the recent trajectory is clearly improved.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	45.18B	39.00B	33.72B	31.62B	29.70B
Gross Profit	21.91B	17.96B	14.01B	12.45B	12.37B
EBITDA	30.25B	26.31B	21.51B	20.33B	19.04B
Net Income	10.98B	8.71B	5.41B	4.49B	5.12B
Balance Sheet
Total Assets	55.60B	53.63B	48.73B	48.59B	44.58B
Cash, Cash Equivalents and Short-Term Investments	9.06B	9.58B	7.14B	6.06B	6.03B
Total Debt	14.46B	17.99B	16.97B	14.35B	18.12B
Total Liabilities	28.98B	28.89B	28.14B	27.82B	28.74B
Stockholders Equity	26.62B	24.74B	20.59B	20.78B	15.85B
Cash Flow
Free Cash Flow	9.46B	6.92B	6.93B	1.62B	-131.97M
Operating Cash Flow	10.15B	7.36B	7.27B	2.03B	392.61M
Investing Cash Flow	1.04B	-2.18B	541.75M	-2.08B	-1.34B
Financing Cash Flow	-10.35B	-4.07B	-5.95B	-664.25M	-1.15B

Netflix Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 82.70
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NFLX, the sentiment is Neutral. The current price of 82.7 is above the 20-day moving average (MA) of 80.03, below the 50-day MA of 86.30, and below the 200-day MA of 110.22, indicating a neutral trend. The MACD of -1.86 indicates Negative momentum. The RSI at 55.86 is Neutral, neither overbought nor oversold. The STOCH value of 72.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NFLX.

Netflix Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NFLX	76 Outperform	$329.50B	32.73	42.76%	―	15.49%	35.54%
DIS	69 Neutral	$187.87B	15.62	11.65%	1.10%	3.61%	152.34%
FOXA	68 Neutral	$22.80B	13.47	16.87%	0.75%	14.91%	9.30%
WBD	68 Neutral	$72.29B	154.05	1.36%	―	-4.29%	―
ROKU	64 Neutral	$12.93B	160.57	3.43%	―	16.61%	83.98%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
PSKY	50 Neutral	$11.47B	-38.94	-1.90%	1.48%	-0.48%	97.09%

Netflix Corporate Events

Netflix Receives Termination Fee After WBD Deal Collapse

On January 19, 2026, Netflix entered into an amended merger agreement under which it would have acquired a reorganized Warner Bros. Discovery entity holding the company’s Streaming & Studios businesses, leaving WBD’s Global Linear Networks and certain other assets separated. This structure was designed to make the retained WBD streaming and studio operations a wholly owned Netflix subsidiary, supported by a package of committed bridge and term financing arrangements.

However, on February 26, 2026, Warner Bros. Discovery notified Netflix that a revised offer from Paramount Skydance Corporation constituted a superior proposal under the merger agreement. Netflix waived its right to negotiate changes, and on February 27, 2026, WBD terminated the deal with Netflix to sign a merger agreement with Paramount Skydance, triggering a $2.8 billion termination fee payable to Netflix.

Concurrent with the termination of the merger agreement on February 27, 2026, all related financing commitments arranged by Netflix, including a bridge commitment letter, incremental bridge facility, a 2025 revolving credit facility and a delayed draw term loan, were automatically canceled. These facilities had been intended to fund the proposed acquisition and associated costs, so their termination effectively unwinds the capital structure Netflix had put in place for the abandoned transaction.

The most recent analyst rating on (NFLX) stock is a Buy with a $120.00 price target. To see the full list of analyst forecasts on Netflix stock, see the NFLX Stock Forecast page.

Netflix Revises Warner Bros. Acquisition Into All-Cash Deal

On January 19–20, 2026, Netflix and Warner Bros. Discovery amended their merger agreement to convert Netflix’s pending acquisition of Warner Bros. into a simplified, all-cash deal valued at $27.75 per WBD share, with WBD investors also set to receive shares in Discovery Global after its planned spin-off. The revised structure, unanimously approved by both boards, is financed through a larger $42.2 billion bridge facility alongside cash and existing credit lines, is designed to increase value certainty for WBD shareholders, accelerate a stockholder vote now targeted by April 2026, and preserve Netflix’s balance sheet while it absorbs WBD’s retained streaming and studios business; the transaction, expected to close 12–18 months after the original 2025 agreement, remains subject to regulatory approvals, completion of the Discovery Global separation, and WBD stockholder approval, and would significantly expand Netflix’s production capacity and competitive position in global film and television.

The most recent analyst rating on (NFLX) stock is a Buy with a $125.00 price target. To see the full list of analyst forecasts on Netflix stock, see the NFLX Stock Forecast page.

Netflix Secures Major Financing Facilities for Warner Merger

On December 19, 2025, Netflix replaced part of a previously arranged bridge financing with longer-term, lower-cost debt facilities to support its pending merger with Warner Bros. Discovery. The company entered into a $5 billion senior unsecured revolving credit facility that can be drawn for the cash portion of the merger purchase price, related transaction fees, refinancing of certain existing debt, and general corporate purposes, with flexible borrowing, prepayment and maturity extension options and interest rates linked to Netflix’s credit rating. On the same date, Netflix also secured a total of $20 billion in senior unsecured delayed draw term loan facilities, split between two- and three-year tranches, likewise earmarked primarily for funding the merger consideration and related expenses, and carrying rating-based pricing and standard financial covenants, including a minimum interest coverage ratio; together, these new facilities meaningfully de-risk the merger financing, improve funding visibility, and reduce reliance on more expensive bridge commitments for Netflix and its stakeholders.

The most recent analyst rating on (NFLX) stock is a Buy with a $125.00 price target. To see the full list of analyst forecasts on Netflix stock, see the NFLX Stock Forecast page.

Netflix Announces Acquisition of Warner Bros. Discovery

On December 4, 2025, Netflix announced an agreement to acquire Warner Bros. Discovery, Inc. (WBD) for a total enterprise value of $82.7 billion, following the separation of WBD’s Global Networks division. This strategic acquisition aims to combine Netflix’s streaming capabilities with Warner Bros.’ extensive library and franchises, enhancing Netflix’s content offerings and strengthening its position in the entertainment industry. The transaction, which is expected to close in 12-18 months, will provide more choice and value for consumers, create opportunities for the creative community, and generate significant shareholder value.

The most recent analyst rating on (NFLX) stock is a Buy with a $152.00 price target. To see the full list of analyst forecasts on Netflix stock, see the NFLX Stock Forecast page.