Overview
- Netflix reported record trailing net income of about $13.65 billion, a total that includes a one-time $2.8 billion pre-tax termination fee from the collapsed Warner Bros. Discovery deal.
- Core operating results are strong with roughly $14.4 billion in operating income over the past four quarters and management forecasting a 31.5% operating margin for the year.
- Top-line growth has slowed from its peak in late 2025 to lower year-over-year increases in 2026, and management’s full-year revenue guidance implies roughly 13–14% growth with advertising revenue expected to rise toward $3 billion.
- The market has sharply repriced Netflix because investors now expect slower growth, compressing the price-to-earnings multiple from levels near 50x 2025 earnings and leaving the stock about 35–40% below its highs despite a recent short-term bounce.
- This selloff joins seven prior Netflix drawdowns of more than 40% since the IPO, a history that has often been followed by major recoveries and that frames investor debate about whether the current drop reflects a buying opportunity or a lasting shift in expectations.