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- This Streaming Heavyweight Just Turned A Selloff Into A Second Shot
This Streaming Heavyweight Just Turned A Selloff Into A Second Shot
Noah Zelvis
November 26, 2025
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You do not need to be a pro to follow this stock move.
It’s one simple checklist for a modern media giant.
Are more people watching and paying, are new money levers actually kicking in, and are profits holding up while spending stays huge?
Right now the answers mostly lean yes, but the share price is behaving like something is broken.
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What Just Happened
Netflix Inc (NASDAQ: NFLX) is trading a little above $104 a share after its 10 for 1 stock split. The stock is up around the high teens % year to date, but still sitting more than 20% below its 52 week high near $134.
The drama really started with Q3 earnings:
Revenue grew about 17% year over year to roughly $11.5B
Net income climbed to around $2.5B
Earnings per share missed expectations
The main culprit was a surprise $619M tax charge from a long running fight with Brazilian tax authorities.
That one line chopped operating margin down to about 28% instead of the 31.5% Netflix had guided.
Management called the Brazil hit a one off and kept full year revenue guidance near $45.1B, roughly 16% growth.
Full year operating margin was trimmed from 30% to 29%, annoying but far from a meltdown.
Then came the 10 for 1 split. One share above $1,000 turned into ten shares a bit above $100. Same company, same total value, but the lower sticker makes it easier for smaller accounts and options traders to jump in.
After a short split pop, the stock slid back into the low 100s as investors went back to stressing about margins, taxes, and tech sentiment in general.
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Why The Stock Looks Wobbly
If the business is still growing, why does the chart look so tired
Three big reasons:
High expectations
Netflix trades on a premium multiple. With a price to earnings ratio in the 40s and a rich price to sales, the bar is high. Any surprise, even a tax one off, gets a quick slap.Spending anxiety
Streaming wars and live sports are not cheap. Investors know Netflix has to keep spending to stay on top, but they do not love being reminded of it in the same quarter as an earnings miss.Tech fatigue
Plenty of big tech names are under pressure as everyone argues about rate cuts, consumer spending, and whether mega cap growth has run too far. Netflix gets lumped into that story whether it deserves it or not.
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The Business In One Breath
Netflix is the default TV app in a lot of homes. You pay a monthly fee and get a firehose of series, films, documentaries, live events, and a growing side of games. Underneath that, the money engine runs on three main legs:
Global subscriptions in more than 190 countries
A fast growing ad supported tier
Early moves into live sports and events so it feels more like a full TV bundle
The more time people spend inside Netflix, the more pricing power it has and the more room there is for ads and new products.
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What Is Working
Growth that does not look tired
Mid teens revenue growth at this scale is impressive.
That is coming from more paying accounts after the password crackdown, steady price tweaks, and healthier performance outside North America.Viewing share creeping higher
In the US, Netflix grabs a high single digit slice of all TV viewing time, and that share has been edging up.
Every extra point matters when you are fighting for screen time in millions of living rooms.Ads finally pulling their weight
The ad tier is not a science project anymore. Tens of millions of users are on ad supported plans, and that base keeps growing.
Ads come with attractive incremental margins, so this can become a powerful second growth engine on top of subscriptions.Live hooks that look a lot like old school TV
Long term deals for WWE Monday Night Raw, NFL Christmas games, and big one off events give Netflix what cable used to have: real appointment viewing.
That helps keep people from cancelling when they finish a favorite show and gives advertisers premium slots to fight over.Wall Street still mostly on the positive side
You have big firms with Buy ratings and targets well above $140, arguing that earnings can grow in the mid-20s % per year for a while if revenue and margins behave.
There are neutral calls in the mix, but this is not some hated name.
The Friction You Should Respect
Tax and regulatory curveballs
The Brazil charge was labeled a one time hit, but it reminded everyone that global businesses can catch random punches from local tax and policy changes.Content and rights inflation
Top tier shows, big films, and live rights are all getting more expensive. If revenue growth ever slows while that cost base stays heavy, margin pressure becomes real in a hurry.A crowded streaming battlefield
Disney, Amazon, and a long list of regional players are all ramping their own slates and ad tiers. To remain the first tile people click, Netflix has to keep spending and experimenting.A valuation that leaves less room for mistakes
Even after the pullback, this is not a bargain bin stock on traditional metrics. It does not have to be cheap, but that premium multiple will sting if growth or margins wobble again.
What To Watch Next
If you keep Netflix on your radar, focus on a few simple tells:
Revenue growth holding in the mid teens, not sliding into single digits
Operating margin drifting back toward the high 20s once the Brazil hit is behind them
Clear, accelerating progress from the ad business in management commentary
Viewing share staying flat to up in key markets instead of leaking to rivals
Any big acquisition news and whether the price, debt, and free cash flow story looks clean or messy
How I Would Frame A Position
Not personal advice, just a way to think about the setup.
Starter on red days
If you already spend half your evenings on Netflix and believe that will not change soon, starting small on down days makes more sense than chasing every split headline.Let proof earn the add
Consider only sizing up if you see two or three quarters in a row with solid mid teens revenue growth, margins moving back in the right direction, and obvious ad tier progress.Trim into hype spikes
If the stock sprints back toward its highs on buzz around a single show or event without a similar move in earnings, taking a little off the table can help you sleep better.Treat it as a core supporting role, not the whole movie
For most diversified portfolios, Netflix probably fits best as a mid single digit position, not the main character.
Bull case
Viewing share keeps rising as Netflix mints global hits and builds out franchises
The ad tier turns into a multibillion dollar, high margin engine layered on top of subs
Live sports and events cut churn and support premium ad pricing
AI tools quietly lower production costs and sharpen recommendations, helping margins without needing Netflix to win some giant model war
Bear case
Content and rights costs outrun revenue growth and squeeze margins
Rival platforms claw back share, especially in fast growing international markets
Large media acquisitions load up the balance sheet and invite regulatory headaches
A broader tech selloff crushes multiples and Netflix does not grow into its valuation fast enough
Valuation In Plain English
You are not buying a cheap fixer upper here. You are paying a premium price for a company with strong growth, a huge audience, and several new levers to pull.
The simple math: if earnings grow solidly and margins stabilize, today’s multiple can look reasonable over time.
If growth or margins slip, you can feel a lot of pain even while the service itself is still humming.
The Bottom Line
Right now Netflix is a healthy streaming machine wearing a slightly bruised stock chart.
Revenue is growing, more users are paying instead of sharing, ads are scaling, and live events are turning the app into something that looks a lot like the full TV bundle many people ditched cable for in the first place.
If you believe streaming keeps eating traditional TV and Netflix stays one of the first apps people open, this post split pullback looks more like a second chance than a red flag.
Start small, watch how the next few quarters land, and let the numbers decide whether this binge belongs in your portfolio.
Action Recap
✅ Starter: Consider nibbling on red days if you want long term exposure to a leading streaming and ad platform
✅ Add On Proof: Look for 2 to 3 quarters of steady mid teens revenue growth, margins stabilizing, and clear ad tier progress
⚠️ Trim On Trouble: Cut back if margin guidance keeps sliding, tax and regulatory surprises stack up, or big acquisitions appear with fuzzy math
👀 Watch Next: Viewing share, ad growth, margin trend after the Brazil charge, and any move into large studio or platform deals
That's our coverage for today; thanks for reading! Reply to this email with feedback or any tech stocks you want me to check out.
Best Regards,
—Noah Zelvis
Tech Stock Insider