Netflix (NFLX) Valuation: A Closer Look After Box Office Success and Live Sports Expansion

If you have been watching Netflix (NFLX) lately, you probably noticed a different kind of buzz around the stock. The recent box office triumph of its animated feature, “Kpop Demon Hunters,” shot to the top of North American charts and quickly became the streamer’s second-most-watched title ever. It did not stop there. Netflix has also secured exclusive rights to broadcast the 2026 World Baseball Classic in Japan, signaling that the company is making serious moves to broaden its reach beyond traditional on-demand viewing. These breakthroughs hint at a new chapter in the Netflix story, and investors are now asking whether this momentum will drive lasting value.

Over the past year, Netflix shares have seen substantial growth, gaining 76%. The stock’s climb reflects optimism around new initiatives in content and event streaming. Even with recent regulatory concerns in Poland and competition from established rivals, Netflix’s move into live sports and global entertainment could set it apart. The combination of steady revenue and net income growth, plus a continued push for market expansion, suggests that momentum is still building.

With all this activity, is Netflix offering a genuine buying opportunity, or is the current share price already factoring in the promise of future growth?

Most Popular Narrative: 53.7% Overvalued

According to the narrative from MichaelP, Netflix is currently seen as significantly overvalued based on the projected fair value. The discount rate applied in this analysis is 8.4%.

Now that Netflix has reached a scale where it can reduce the pace of content cost growth, it is becoming more profitable. Its content spending increased from $1.75 billion in 2012 to $16.7 billion in 2022, representing a 25% annual growth rate. This closely matches its revenue growth rate for the same period, which rose from $3.6 billion to $31.6 billion. Netflix management, specifically the CFO, has stated that the company is past the most cash-intensive part of building out its original programming (page 12 of the earnings transcript), meaning content costs are expected to grow at a much slower rate than in the past.

What explains this dramatic valuation gap? Why does the narrative expect average subscriber growth to continue powering top-line gains? Which financial levers could justify a much lower price than today’s market value? If you want the detailed assumptions behind the sharp discount, consult the latest narrative for the full analysis.

Result: Fair Value of $797.74 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, factors such as ongoing strikes in Hollywood or a sudden slump in international subscriber growth could quickly shift Netflix’s favorable outlook.

Find out about the key risks to this Netflix narrative.

Another View: SWS DCF Model Offers a Check

To balance things out, our SWS DCF model takes a look at Netflix’s fundamentals and sees the shares as trading above fair value. This echoes concerns from the first analysis. Could this be a warning sign, or does the market know something we don’t?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Netflix for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Netflix Narrative

Of course, if you see things differently or want to dig deeper on your own, you can build a personalized narrative for Netflix in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Netflix.

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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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