Is Netflix (NFLX) Fairly Priced After Recent Share Price Weakness?

If you are wondering whether Netflix is priced for long term growth or already reflects most of its potential, looking closely at valuation can help you frame that question more clearly. The stock last closed at US$86.12, with returns of a 2.1% decline over 7 days, an 8.8% decline over 30 days, a 5.4% decline year to date and an 11.4% decline over 1 year, set against a 143.9% gain over 3 years and a 59.8% gain over 5 years. Recent coverage has focused on how Netflix is positioning its content slate and subscription model, alongside ongoing discussion of streaming competition and consumer attention. Together, these themes help frame why the share price has moved the way it has over different time periods. Simply Wall St currently gives Netflix a valuation score of 3 out of 6, based on how it screens across several checks for being undervalued. Next, we will look at those approaches side by side before finishing with a way to think about value that goes beyond any single model.

Find out why Netflix’s -11.4% return over the last year is lagging behind its peers.

Approach 1: Netflix Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company could generate in the future and discounts those back into today’s dollars to arrive at an estimated intrinsic value per share.

For Netflix, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model, based on current Free Cash Flow of about US$9.6b over the last twelve months. Analyst estimates and extrapolations suggest Free Cash Flow of US$11.6b in 2026, rising to a projected US$21.5b by 2030, with later years extrapolated beyond the analyst window.

Discounting those projected cash flows back to today and aggregating them results in an estimated intrinsic value of US$82.93 per share. Compared with the recent share price of US$86.12, the model implies the stock is about 3.8% overvalued, which is a relatively small gap.

Based on this DCF view, Netflix appears close to its calculated fair value, with only a modest premium in the market price.

Result: ABOUT RIGHT

Netflix is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.

NFLX Discounted Cash Flow as at Jan 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Netflix.

Approach 2: Netflix Price vs Earnings

For a profitable company like Netflix, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings. A higher or lower P/E often reflects what the market expects for future growth and how much risk investors feel they are taking on.

In simple terms, faster growth and lower perceived risk can support a higher “normal” P/E, while slower growth or higher risk usually point to a lower one. Netflix currently trades on a P/E of 33.11x, compared with the Entertainment industry average of 21.07x and a peer group average of 82.62x.

Simply Wall St’s Fair Ratio for Netflix is 33.45x. This is a proprietary estimate of what the P/E could be given factors such as earnings growth, profit margins, industry, market cap and company specific risks. It is therefore more tailored than a basic comparison with peers or an industry average, which may not share the same growth outlook or risk profile. With the current P/E of 33.11x sitting very close to the Fair Ratio of 33.45x, Netflix appears broadly in line with that model-implied valuation.

Result: ABOUT RIGHT

NasdaqGS:NFLX P/E Ratio as at Jan 2026

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1425 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Netflix Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which let you attach a clear story, your perspective on a company, to the numbers, your fair value, revenue, earnings and margin assumptions.

A Narrative links what you believe about a company, such as Netflix’s content strategy or pricing power, to a simple financial forecast and then to a fair value that you can compare directly with today’s share price.

On Simply Wall St, used by millions of investors, Narratives sit inside the Community page as an easy, accessible tool that helps you decide whether a stock might be attractive or expensive by lining up your Fair Value against the current Price and updating automatically when new results or news are added.

For example, one investor might set a Narrative where Netflix needs very strong revenue growth and high margins to justify a higher fair value, while another might assume more moderate growth and lower margins that lead to a much lower fair value, and you can see both side by side to decide which story fits your own view.

Do you think there’s more to the story for Netflix? Head over to our Community to see what others are saying!

NasdaqGS:NFLX 1-Year Stock Price Chart

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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