Netflix (NASDAQ: NFLX) stock was flying high last summer on strong subscriber and operating income growth.
But then some cracks started to appear in the business. – Earnings growth was bolstered by unsustainable positive impacts from foreign exchange rates and price hikes. – A Brazilian tax created a one-time earnings hit and raised questions about whether it would remain an ongoing expense. – It tried to acquire Warner Bros
Discovery at an exorbitantly high price. – Management’s 2026 outlook showed decelerating revenue growth. The company escaped the overpriced Warner Bros. Discovery acquisition while receiving a termination fee and pushed through another price hike sooner than expected.
Investors rewarded the stock following the news, but it has since sold off to a price unseen since before 2025. The stock now sits about 42% off its high from last summer, making it an excellent buying opportunity for investors. This cash machine is selling for cheap After years of burning cash to develop original content, Netflix has transformed into a massive free-cash-flow-generating machine.