Be it the news flow or price action, it’s been an eventful year for Netflix (NFLX) stock. From 52-week lows of $82.11 at the beginning of 2025, NFLX stock rallied by 63% to $134.12 by June 2025.
The rally was, however, short-lived, with Netflix missing Q3 earnings estimates. The selling in NFLX stock has accelerated following the events unfolding related to the potential Warner Bros. (WBD) deal.
On Dec. 5, Netflix announced a definitive agreement to acquire Warner Bros., including its film and television studios, HBO Max, and HBO. While the markets weighed the pros and cons of the deal, Paramount Skydance (PSKY) offered a $30 per share deal for WBD. In comparison, Netflix's cash and stock transaction is valued at $27.75 per WBD share.
With uncertainty related to the deal, Seaport Research Partners cut its price target for NFLX stock from $138 to $115. Even Pivotal Research Group downgraded NFLX stock from “Buy” to “Hold.” Amidst some panic selling, NFLX stock seems attractive for long-term investors.
About Netflix Stock
Headquartered in Los Gatos, California, Netflix is one of the world’s largest providers of entertainment services. The company has more than 300 million paid subscribers in over 190 countries. Netflix enables members to receive streaming content through multiple internet-connected devices.
For Q3 2025, Netflix reported revenue of $11.5 billion, which was higher by 17% on a year-on-year (YoY) basis. For the same period, the company reported operating income of $3.2 billion.
NFLX stock has been in a downtrend with a correction of 21% in the last six months. The recent Warner Bros. deal drama has been the primary reason for a sharp selloff.
Positive Business Metrics
While uncertainty around the potential deal has impacted sentiments, it’s important to look at business metrics for Netflix that point to an optimistic future.
The first point to note is that Netflix reported free cash flow of $2.7 billion for Q3 2025. The annualized FCF is potentially above $10 billion considering the growth trajectory. Further, the company ended the quarter with a cash buffer of $9.3 billion. This provides ample flexibility to invest in quality entertainment products. The company already has a strong line-up of returning and new series. Quality content is likely to ensure that engagement metrics remain robust. Just to put things into perspective, Netflix hit its highest quarterly view share ever in the United States and the U.K.
From a monetization perspective, Netflix is also building on its advertising business. While the revenue base is small, the company is on track to more than double its ads revenue in 2025.
Another growth factor for Netflix is increased global penetration. For Q3 2025, Netflix reported 75.9% of revenue from UCAN and EMEA. Latin America and APAC contributed to 24.1% of revenue. Considering the addressable population, there is ample scope for growth in emerging markets.
On the flip side, intense competition remains a risk. However, the industry edge is quality content, and Netflix has delivered on that front on a sustained basis.
What Analysts Say About NFLX Stock
Based on the rating of 46 analysts, NFLX stock is a consensus “Moderate Buy.”
While 27 analysts have assigned a “Strong Buy” rating, three and 14 analysts have a “Moderate Buy” and “Hold” rating, respectively. Additionally, two analysts believe that NFLX stock is a “Strong Sell.”
Based on these ratings, the analysts have a mean price target of $131.34. This would imply an upside potential of 38%. Also, considering the most bullish price target of $152.50, the upside potential is 60%.
While uncertainty over the Warner Bros. deal has impacted NFLX stock, it’s worth noting that valuations seem attractive at a forward price-earnings ratio of 36.67.
Further, a Needham analyst opines that Netflix buying Warner Bros. might not be the best deal. Analyst Laura Martin believes that the deal would “put $83B of additional value at risk of being disrupted by GenAI.” Therefore, losing the bidding war might also be a positive for Netflix.
On the date of publication, Faisal Humayun Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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