Netflix Is Down 41% in 1 Year. Could the Sell-Off Be Nearing an End?

Netflix shares have dropped 41% over the past year, but valuation metrics suggest the selloff may be overdone. The stock now trades at a price-to-earnings ratio of 21x—its lowest multiple in four years—while 68% of sell-side analysts rate it a buy with a median price target of $94.50, implying 37% upside over the next twelve months.

The streaming giant posted a 33% operating margin in Q2 and generated $12.5 billion in free cash flow. Its advertising business is projected to double from current levels to $3 billion in revenue by 2026, providing a new growth lever as subscriber additions mature. The recent slide followed concerns about slowing revenue growth and a failed attempt to acquire Warner Bros. Discovery, but operating fundamentals remain intact.

At current levels, Netflix trades at a discount to its historical valuation despite maintaining dominant streaming market share and expanding profitability. The combination of improving margins, accelerating ad revenue, and strong cash generation contrasts with the depressed multiple.