Netflix stock has gone from a classic growth story to something more complicated. As of May 29, the streaming giant traded at 28 times trailing earnings, even as revenue and free cash flow kept climbing.
That shift matters because investors who once paid almost any price for Netflix are now looking at a company that still expands, but no longer at the breakneck pace that defined much of the 2010s. Back then, revenue and subscriber numbers were rising fast and the stock regularly carried triple-digit price-to-earnings ratios. Today, Lyle Daly argues the business is still a quality investment — but only if buyers understand what they are getting before they commit.
The reason the stock keeps drawing attention is simple: the business is still producing real growth. Netflix ended 2025 with more than 325 million subscribers, far ahead of Amazon’s estimated 200 million users, and it remains the leader among streaming services. In the first quarter of 2026, revenue reached $12.3 billion, up 16% from a year earlier, and trailing-12-month free cash flow stood at $11.9 billion at the end of the quarter. Management is guiding full-year 2026 revenue to $50.7 billion to $51.7 billion, which would imply 12% to 14% growth.
That is not the profile of a bargain-bin stock, but it is also not the profile of the hypergrowth name investors once chased. Netflix’s 28 times trailing earnings valuation is less than half its 10-year average of 60 times trailing earnings, and it still does not fully fit a value-stock label. The Russell 1000 Value index started 2026 at 22 times trailing earnings, which shows Netflix is cheaper than it used to be without being truly cheap by classic value standards.
The margin story helps explain why the market is willing to give the stock a lower multiple and still keep paying up for it. Netflix’s ad-supported tier has become a solid income stream, with ad revenue surpassing $1.5 billion in 2025, while operating margin rose 3 points to 29.5% that year. Management is targeting a 31.5% operating margin for 2026, with controlled content spending and price increases helping offset slower growth, especially as the company leans harder into international markets where lower monthly rates can limit revenue gains.
For investors, the real question is not whether Netflix is still growing — it is — but what kind of returns that growth can support from here. Daly’s view points to average annual gains in the 10% to 15% range, which would make Netflix a steady performer rather than the market runaway it once was. The next test is whether 2026 revenue and margins land at the high end of management’s guidance, because that will tell the market whether Netflix deserves to keep trading like a premium business or something closer to a mature one.
