- Texas sues Netflix over data collection; shares edge lower
May 11, 2026
Investing.com -- Texas Attorney General Ken Paxton has filed a lawsuit against Netflix Inc (NASDAQ:NFLX), alleging the streaming giant illegally surveilled users and exploited children’s data. The legal action claims the company rebranded itself as a "logging company" that prioritizes data monetization over consumer privacy.
The state’s petition alleges that Netflix deceptively collected sensitive behavioral information without obtaining proper consent from its millions of Texas subscribers. Shares of the Los Gatos-based company ticked down 1.3% in Monday trading following the announcement of the litigation.
The lawsuit asserts that Netflix misrepresented its business model for years by claiming a subscription fee shielded users from the data-harvesting practices of other Big Tech firms. In reality, the state argues, the platform uses intentional engineering to track viewing habits, device locations, and household network interactions.
According to the filing, every user interaction is treated as a granular data point to be processed and eventually sold. The state contends that this tracking infrastructure was built while executives publicly derided competitors for "serving two masters."
Attorney General Paxton specifically highlighted the alleged exploitation of minors through "kids profiles" that were marketed as safe, segregated spaces. The petition claims these profiles were subjected to the same aggressive telemetry and logging apparatus used for adult accounts.
Netflix is accused of withholding privacy controls from these profiles while misleading parents about the extent of behavioral tracking. The state argues that parents were lulled into a false sense of security by assurances that the platform was "ad-free and kid-friendly."
The lawsuit details how Netflix allegedly pivoted into digital advertising by leveraging mountains of data quietly extracted from families. It claims the company now shares this information with commercial data brokers and advertising technology platforms like Google and Amazon.
These partnerships reportedly allow advertisers to match their own customer lists against Netflix’s internal audience data. The state argues that Texans never agreed to have their viewing identities stitched together across the "shadowy networks" of the advertising industry.
Beyond data collection, the filing alleges that Netflix intentionally designed its interface to be addictive through the use of "dark patterns." Features such as autoplay are cited as tools used to override consumer agency and eliminate natural breaking points.
Story Continues
The state contends that these design choices are particularly harmful to children, whose impulse control is still developing. By keeping users glued to the screen, Netflix allegedly maximizes the volume of behavioral signals it can harvest for its logging operations.
The Attorney General is seeking to hold Netflix accountable under the Texas Deceptive Trade Practices Act (DTPA). The lawsuit pursues civil penalties of up to $10,000 per violation and seeks a permanent injunction to stop the unauthorized collection of data.
"Netflix has built a surveillance program designed to illegally collect and profit from Texans’ personal data without their consent, and my office will do everything in our power to stop it," said Attorney General Paxton. "Netflix is not the ad-free and kid-friendly platform it claims to be."
Specific demands include requiring Netflix to disable autoplay by default on kids' profiles and purging all deceptively collected data. The state also seeks to prevent future data sharing with third-party brokers without explicit, informed consumer consent.
Netflix has historically countered privacy allegations by framing data collection as an essential component of the modern consumer experience. In past disputes, the company has argued that "logging" user interactions is not a form of surveillance, but rather a technical necessity for maintaining a seamless global streaming infrastructure and delivering the highly personalized recommendations that users have come to expect.
Beyond operational justifications, the company has frequently employed aggressive lobbying and statutory challenges to weaken the legal basis of privacy claims. During its 2011 dispute over the Video Privacy Protection Act (VPPA), Netflix argued that the Reagan-era law hindered innovation in the social media age. This effort eventually helped lead to a 2013 amendment to the VPPA, which simplified the process for companies to obtain long-term, "blanket" consent from users for data sharing.
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- Is It Time To Reassess Warner Bros. Discovery (WBD) After The Terminated Netflix Proposal?
May 9, 2026
Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge.
If you are wondering whether Warner Bros. Discovery is attractively priced or already fully valued, the current share price of US$27.12 is a good starting point but far from the whole story. The stock has returned 0.3% over the last week, a 0.9% decline over the last month, a 4.9% decline year to date and 201.0% over the past year, which can change how investors think about both opportunity and risk. Recent headlines have focused on Warner Bros. Discovery's efforts to reshape its content portfolio and streaming strategy, alongside ongoing commentary about debt levels and cost efficiencies. Together, these themes help explain why the stock has seen periods of strong momentum as well as bouts of caution. Simply Wall St currently assigns Warner Bros. Discovery a valuation score of 3/6. The rest of this article will break down how different methods like DCF, multiples and asset based metrics compare, before finishing with a broader way to think about value that goes beyond the headline numbers.
Warner Bros. Discovery delivered 201.0% returns over the last year. See how this stacks up to the rest of the Entertainment industry.
Approach 1: Warner Bros. Discovery Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes estimates of a company’s future cash flows and discounts them back to today using a required return, giving an estimate of what the business could be worth per share right now.
For Warner Bros. Discovery, the model used is a 2 stage Free Cash Flow to Equity approach, based on projected free cash flow and then longer term extrapolations. The latest twelve month free cash flow is about US$2.45b. Analyst and extrapolated projections in the model reach US$6.00b of free cash flow by 2030, with a path of intermediate estimates between 2026 and 2035 supplied by analysts and Simply Wall St’s extrapolation.
When all those projected cash flows are discounted back to today, the DCF model arrives at an estimated intrinsic value of about US$33.40 per share. Compared with the current share price of US$27.12, this implies the stock is around 18.8% undervalued based on these cash flow assumptions.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Warner Bros. Discovery is undervalued by 18.8%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.WBD Discounted Cash Flow as at May 2026
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Warner Bros. Discovery.
Story Continues
Approach 2: Warner Bros. Discovery Price vs Sales
Price to Sales, or P/S, is often a useful cross check for companies where earnings can be volatile, because it compares the value of the equity to revenue rather than profit. Investors usually accept a higher or lower P/S depending on what they expect for future growth and how much risk they see in the business, so there is no single “right” multiple.
Warner Bros. Discovery currently trades on a P/S of 1.83x. That sits above the Entertainment industry average of 1.48x, but below the peer group average of 2.62x. To give more context than simple comparisons, Simply Wall St also calculates a “Fair Ratio”, which is the P/S multiple suggested by factors such as earnings growth, profit margins, industry, market cap and specific risks.
For Warner Bros. Discovery, the Fair Ratio is 2.30x, which is higher than the current P/S of 1.83x. On this framework, the stock screens as undervalued relative to what would be implied by those fundamentals.
Result: UNDERVALUEDNasdaqGS:WBD P/S Ratio as at May 2026
P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 18 top founder-led companies.
Upgrade Your Decision Making: Choose your Warner Bros. Discovery Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives tie your view of Warner Bros. Discovery’s story to concrete forecasts and a Fair Value. This lets you use Simply Wall St’s Community page to compare that Fair Value with the current share price. You can see how one investor’s optimistic narrative with a Fair Value of US$31.25 contrasts with another’s more cautious narrative at US$10.00, and watch those story driven models update automatically as new earnings, deal news or regulatory developments come through. This helps you decide how comfortable you are with the gap between price and value.
For Warner Bros. Discovery however we'll make it really easy for you with previews of two leading Warner Bros. Discovery Narratives:
🐂 Warner Bros. Discovery Bull Case
Fair value in this bullish narrative: US$28.45 per share.
At the current price of US$27.12, that Fair Value implies the stock is about 4.7% undervalued on this view.
Assumed revenue growth used in this narrative: 22.23%.
Leans on HBO Max expansion, global sports and iconic franchises like Harry Potter, DC and Lord of the Rings to support diversified revenue streams over time. Builds in improving margins, higher free cash flow and a lower future P/E multiple than today, combined with a 12.3% discount rate, to reach a Fair Value above the current share price. Flags meaningful risks around franchise fatigue, linear TV headwinds, execution on international streaming and churn reduction, which could all challenge the optimistic case if they do not play out as assumed.
🐻 Warner Bros. Discovery Bear Case
Fair value in this more cautious narrative: US$18.17 per share.
At the current price of US$27.12, that Fair Value implies the stock is about 49.3% overvalued on this view.
Assumed revenue growth used in this narrative: very large.
Focuses on how the now terminated US$72b Netflix proposal for Warner Bros. Discovery ran into rising antitrust scrutiny, a competing Paramount bid and growing activist pressure. Highlights how DOJ review, potential litigation, ticking fees, termination fees and proxy risk all added moving parts that were hard for investors to price with confidence. Argues that capital allocation, regulatory overhang and integration risk around large entertainment mergers can justify a Fair Value below the current share price, even if investors see strategic appeal in potential deals.
These two narratives show how reasonable investors, using the same company but different assumptions and risk tolerances, can land on very different conclusions about whether Warner Bros. Discovery stock looks appealing at US$27.12 today. See what the community is saying about Warner Bros. Discovery
Do you think there's more to the story for Warner Bros. Discovery? Head over to our Community to see what others are saying!NasdaqGS:WBD 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.
Companies discussed in this article include WBD.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- Ken Burns on What He Will and Won’t Allow When Financing His Films
May 8, 2026
The filmmaker on his new documentary, ‘The American Revolution,’ and why he steers clear of HBO and Netflix.
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- Jim Cramer on Netflix: “It’s Not a Buy, Buy, Buy”
May 8, 2026
Netflix, Inc. (NASDAQ:NFLX) was one of the stocks on Jim Cramer’s radar as he highlighted AI winners to buy for 2026. A caller asked if the stock is a buy, given the competition in the streaming space. Cramer replied:
Well, okay, it’s not a buy, buy, buy, because we’re still, it’s a quizzical moment for Netflix because they went and they did that ill-fated attempt to be able to get Warner Brothers Discovery, and because of that, people feel that they must need that property. We have to wait one more quarter, and then I think people will realize, no, they just did it. It would’ve been a good idea. Let’s move on.
Photo by Alexander Shatov on Unsplash
Netflix, Inc. (NASDAQ:NFLX) provides streaming entertainment, including TV series, films, documentaries, and games. Cramer called the company a “juggernaut” during the April 10 episode, as he said:
Netflix reports Thursday, and this company’s a juggernaut. So many thought that they took their eye off the ball with the attempted purchase of Warner Brothers Discovery. I thought it’d be terrific either way, okay? If they got it, it’d be terrific. If they didn’t, well, they’d get paid a $2.8 billion breakup fee, walk away. I think they can just build up a great studio on their own. But more importantly, think of this, Netflix came out of nowhere to build this incredible, the greatest entertainment company on earth. I bet they can just keep doing what they’re doing. Let’s give them the benefit of the doubt.
While we acknowledge the potential of NFLX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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- Netflix (NFLX) Is Down 5.7% After Cautious Q2 Guide And $25 Billion Buyback Plan - Has The Bull Case Changed?
May 8, 2026
In recent days, Netflix reported Q1 results that beat expectations but were accompanied by softer Q2 guidance, while also authorizing a US$25.00 billion share repurchase plan and preparing for co‑founder Reed Hastings to leave the board in June. These moves highlight Netflix’s shift from subscriber-led expansion to monetizing a large user base through advertising, pricing power, and capital returns at a time when rivals like Disney are showing strong streaming profitability. Next, we’ll examine how this cautious guidance and large buyback authorization interact with Netflix’s existing investment narrative around monetization and efficiency.
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Netflix Investment Narrative Recap
To own Netflix today, you need to believe that its pivot from chasing raw subscriber growth to monetizing a very large audience through advertising, pricing and content efficiency can sustain healthy profits even as streaming competition tightens. The latest Q1 beat, softer Q2 guidance and leadership transition do not fundamentally change that story, but they refocus near term attention on whether ad growth and pricing can offset any slowdown in membership or viewing time, which remains the key catalyst and risk right now.
The new US$25.00 billion buyback authorization stands out as the most relevant announcement, because it directly intersects with the monetization and efficiency narrative. It signals that management is prioritizing capital returns alongside reinvestment at a time when peers like Disney are showing strong streaming profitability. For investors focused on the ad tier and margin expansion as drivers of value, the scale and timing of these repurchases could meaningfully influence per share outcomes and how the market weighs execution risks.
Yet while the monetization story is appealing, rising content costs and intensifying competition are pressures investors should be aware of as they weigh whether Netflix can truly offset...
Read the full narrative on Netflix (it's free!)
Netflix's narrative projects $59.4 billion revenue and $17.7 billion earnings by 2028. This requires 12.5% yearly revenue growth and a $7.5 billion earnings increase from $10.2 billion today.
Uncover how Netflix's forecasts yield a $113.17 fair value, a 28% upside to its current price.
Exploring Other PerspectivesNFLX 1-Year Stock Price Chart
Some of the most optimistic analysts were assuming revenue could reach about US$68.7 billion and earnings US$22.5 billion by 2029, which is far more bullish than consensus and leans heavily on rapid ad growth and margin expansion that could be tested by any slowdown in engagement or resistance to higher pricing after this guidance reset.
Story Continues
Explore 26 other fair value estimates on Netflix - why the stock might be worth just $90.80!
Reach Your Own Conclusion
Don't just follow the ticker - dig into the data and build a conviction that's truly your own.
A great starting point for your Netflix research is our analysis highlighting 5 key rewards and 2 important warning signs that could impact your investment decision. Our free Netflix research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Netflix's overall financial health at a glance.
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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.
Companies discussed in this article include NFLX.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- Warner Bros. Discovery Q1 Earnings Miss Estimates, Revenues Fall Y/Y
May 7, 2026
Warner Bros. Discovery WBD reported a first-quarter 2026 loss of $1.17 per share, missing the Zacks Consensus Estimate of a loss of 10 cents. The company had reported a loss of 18 cents per share in the year-ago quarter. The quarter's reported GAAP loss was substantially inflated by a $2.8 billion termination fee paid to Netflix in connection with the pending merger with Paramount Skydance Corporation, as well as $1.3 billion in pre-tax acquisition-related amortization and restructuring charges.
Revenues decreased 1% year over year to $8.89 billion, missing the Zacks Consensus Estimate by 0.41%.
Distribution revenues were down 1% ex-forex to $4.91 billion, as underlying growth in global streaming subscribers was offset by continued domestic linear pay TV subscriber declines and the impact of the HBO Max domestic distribution deal renewal with a former related party. Advertising revenues decreased 8% ex-forex year over year to $1.85 billion, as ad-lite streaming subscriber growth was more than offset by the absence of the NBA and continued domestic linear audience declines; the absence of the NBA negatively impacted the year-over-year growth rate by 7% ex-forex. Content revenues were relatively unchanged year over year at $1.89 billion, as higher intercompany content revenues at the Studios segment were offset by higher intercompany eliminations.
WBD ended the first quarter of 2026 with more than 140 million global streaming subscribers, meaningfully exceeding its own guidance threshold and up 14% year over year. Beginning with first-quarter 2026, WBD no longer reports granular subscriber metrics or ARPU on a quarterly basis.
Warner Bros. Discovery, Inc. Price, Consensus and EPS SurpriseWarner Bros. Discovery, Inc. Price, Consensus and EPS Surprise
Warner Bros. Discovery, Inc. price-consensus-eps-surprise-chart | Warner Bros. Discovery, Inc. Quote
WBD's Q1 2026 Details
The Streaming segment reported revenues of $2.89 billion, up 7% ex-forex year over year. Distribution revenues rose 7% ex-forex, driven by continued subscriber growth in existing markets and the global expansion of HBO Max through new distribution deals, partially offset by the domestic distribution deal renewal with a former related party. Advertising revenues increased 19% ex-forex, primarily reflecting growth in global ad-lite subscribers, despite a 5% ex-forex headwind from the absence of the NBA. Streaming Adjusted EBITDA increased 17% ex-forex to $438 million from $339 million in the year-ago quarter, driven by robust topline growth that more than offset higher marketing and content investment tied to HBO Max's international launches.
The Studios segment reported revenues of $3.13 billion, up 31% ex-forex year over year. Content revenues rose 33% ex-forex, with TV revenues increasing 58% ex-forex, primarily driven by higher intercompany content licensing to support HBO Max's international rollout and higher third-party licensing, while theatrical revenues advanced 21% ex-forex on a similar dynamic. Games revenues decreased 30% ex-forex on lower library revenues. Studios Adjusted EBITDA increased 156% ex-forex to $775 million from $259 million in the prior-year quarter, reflecting the step-change benefit of accelerated intercompany content licensing. On a full-year 2026 basis, Studios Adjusted EBITDA is expected to be roughly in line with 2025.
The Global Linear Networks segment reported revenues of $4.38 billion, down 9% ex-forex year over year. Distribution revenues declined 8% ex-forex, primarily driven by a 10% decrease in domestic linear pay TV subscribers, partially offset by a 2% increase in domestic affiliate rates. Advertising revenues fell 12% ex-forex, with the absence of the NBA accounting for 7% of that decline alongside 8% domestic audience declines; underlying advertising trends nevertheless improved 200 basis points sequentially. Global Linear Networks Adjusted EBITDA decreased 10% ex-forex to $1.63 billion from $1.79 billion in the year-ago quarter, though cost discipline helped partially cushion the impact as operating expenses declined 9% ex-forex.
Total Adjusted EBITDA for the first quarter of 2026 was $2.20 billion, roughly flat ex-forex year over year, as gains in the Streaming and Studios segments were offset by the decline in the Global Linear Networks segment.
Story Continues
WBD's Balance Sheet & Cash Flow
Warner Bros. Discovery ended the first quarter of 2026 with cash and cash equivalents of $3.26 billion, compared with $4.57 billion as of Dec. 31, 2025. As of March 31, 2026, the company's $4 billion revolving credit facility remained undrawn. WBD had $3.85 billion drawn on its revolving receivables program, a $150 million increase versus the fourth quarter of 2025. Gross debt stood at $33.4 billion with net leverage of 3.4x compared with 3.3x at the end of the fourth quarter of 2025.
First-quarter 2026 operating activities used $208 million in cash, compared with cash provided of $553 million in the prior-year quarter. Free cash flow decreased to negative $476 million from $302 million a year ago, primarily driven by higher net content investment across the Streaming and Studios segments, higher tax payments and working capital timing, partially offset by lower cash interest payments. Free cash flow was unfavorably impacted by approximately $100 million of separation and transaction-related items. WBD repaid $123 million of Senior Notes during the quarter.
Q2 & Full-Year 2026 Guidance by WBD
WBD remains on track to surpass 150 million global streaming subscribers by the end of 2026.
For the second quarter, the absence of the NBA is expected to represent a 20% ex-forex headwind to advertising revenues in the Global Linear Networks segment, partially offset by a net 400 basis point benefit from the NCAA March Madness Final Four and Championship broadcast.
The previously disclosed domestic distribution deal renewal, which has weighed on distribution revenue growth, is expected to be lapped by the end of May 2026.
For Studios, the second quarter will face a difficult comparison against A Minecraft Movie, Sinners and Final Destination: Bloodlines from the prior-year period.
The pending acquisition of WBD by Paramount Skydance Corporation received shareholder approval on April 23, 2026 and is expected to close during the third quarter of 2026. WBD expects to incur additional transaction-related cash costs through the close of the transaction.
Zacks Rank & Stocks to Consider
WBD currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader Zacks Consumer Discretionary sector are Capcom CCOEY, Sony SONY and Fox Corporation FOXA. Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Capcom is set to report fourth-quarter fiscal 2026 results on May 12. Capcom shares have declined 6.6% year to date.
Sony is slated to report fourth-quarter fiscal 2026 results on May 13. Sony shares have declined 19% year to date.
Fox Corporation is set to report third-quarter fiscal 2026 results on May 11. Fox Corporation shares have declined 14.8% year to date.
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- Is It Time To Reassess Netflix (NFLX) After Recent Share Price Weakness
May 7, 2026
Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE.
If you are looking at Netflix and wondering whether the current price really reflects what the stock is worth, this breakdown is designed to help you separate story from numbers. After reaching a last close of US$88.27, the stock has seen a 4.2% decline over 7 days, a 10.8% decline over 30 days, a 3.0% decline year to date, but a 163.2% return over 3 years and an 82.0% return over 5 years, which can affect how you think about both growth potential and risk. Recent coverage around Netflix has focused on factors such as competition in streaming, shifts in subscriber behavior and how the business allocates capital between content, technology and shareholder returns. These themes help frame whether recent price moves line up with the underlying fundamentals or reflect changing sentiment. On Simply Wall St's checklist, Netflix currently holds a valuation score of 5 out of 6. This signals that several traditional metrics suggest the stock may be undervalued. The rest of this article will walk through those methods, then finish with a broader way to think about valuation that goes beyond a single number.
Find out why Netflix's -23.6% return over the last year is lagging behind its peers.
Approach 1: Netflix Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a stock could be worth by projecting future cash flows and discounting them back to today, so you can compare that value with the current share price.
For Netflix, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flows in US$. The latest twelve month free cash flow sits at about $12.0b. Analysts provide specific forecasts for the next few years, and Simply Wall St then extrapolates further out, with projected free cash flow of $22.7b in 2030 and additional estimates through 2035.
Taking all those projected cash flows and discounting them back to today results in an estimated intrinsic value of $91.95 per share, compared with the recent share price of $88.27. That implies the stock is about 4.0% undervalued, which is a relatively small gap and indicates the market price is broadly in line with this cash flow based estimate.
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 May 2026
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Netflix.
Story Continues
Approach 2: Netflix Price vs Earnings
For a profitable company, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. It is a simple yardstick that many investors use to compare stocks that already generate consistent profits.
What counts as a normal or fair P/E ratio depends on how you view two things: growth potential and risk. Higher expected earnings growth or lower perceived risk can support a higher P/E, while lower growth expectations or higher risk usually points to a lower multiple.
Netflix currently trades on a P/E of 27.79x. This is in line with the Entertainment industry average P/E of 27.79x, but sits well below the peer group average of 52.82x. Simply Wall St also calculates a Fair Ratio of 30.99x for Netflix. This proprietary metric estimates the P/E that might be appropriate given factors such as earnings growth, profit margins, industry, market cap and risk profile, rather than relying only on broad peer or industry comparisons.
Because the Fair Ratio of 30.99x is modestly higher than the current P/E of 27.79x, this framework indicates that Netflix is trading below that fair multiple.
Result: UNDERVALUEDNasdaqGS:NFLX P/E Ratio as at May 2026
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.
Upgrade Your Decision Making: Choose your Netflix Narrative
Earlier we mentioned that there is an even better way to think about valuation. This is where Narratives come in, a simple tool on Simply Wall St's Community page that lets you attach a clear story about Netflix to your numbers by linking your view on its future revenue, earnings and margins to a forecast and a fair value. You can then compare that fair value with the current share price. The platform continuously updates Narratives as new news or earnings arrive and shows how different investors can reasonably land in very different places, such as one Netflix Narrative that arrives at a fair value of about US$62.62 and another closer to US$149.37.
For Netflix, however, we will make it really easy for you with previews of two leading Netflix Narratives:
These sit on opposite sides of the fair value debate, so you can see how different assumptions about growth, margins and competition translate into very different price targets.
🐂 Netflix Bull Case
Fair value: US$797.74
Undervaluation versus last close: about 89.0%
Revenue growth assumption: 13.0%
Assumes Netflix benefits as smaller streaming platforms struggle to reach profitable scale, which could improve its leverage when sourcing content and help support subscriber growth and pricing power. Builds in a long runway for ad supported plans, paid sharing and higher average revenue per member to support higher revenue and margins over time, while content and operating costs are kept under tighter control. Sees profit margins expanding as scale effects and cost discipline feed through to cash flows, with capital then recycled into higher return projects, debt reduction or shareholder returns.
🐻 Netflix Bear Case
Fair value: US$79.39
Overvaluation versus last close: about 11.2%
Revenue growth assumption: 9.18%
Uses a blended approach that weighs DCF, EPS growth and several historical multiples, with more emphasis on cash flows and earnings than on simple mean reversion to past P/E or P/S levels. Highlights that some valuation methods, such as DCF and P/S, point to a price above fair value, especially once a 9.45% cost of capital and sector competition from other large streaming platforms are factored in. Concludes that at recent prices the stock screens as overvalued or at least slightly overvalued on this framework, even though profitability metrics, margins and capital efficiency are viewed positively.
Together, these Narratives show how reasonable investors can look at the same stock, plug in different growth and risk assumptions, and end up with fair values ranging from around US$80 to almost US$800. That spread is a useful reminder to focus on which story you believe is closer to how Netflix will actually run its business over the next decade, and whether the current price gives you enough room for error.
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Netflix on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.
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.
Companies discussed in this article include NFLX.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- Warner Bros. Posts Wider-Than-Expected Loss. The Stock Slides.
May 6, 2026
Media companies across the board are seeing a fundamental change in how customers watch TV. Disney has found a way to capitalize on it.
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- Analyst Downgrades Netflix (NFLX) From ‘Buy’ to ‘Hold’
May 6, 2026
With an upside potential of 24.92% as of May 3, Netflix, Inc. (NASDAQ:NFLX) is included among the 10 Best Fortune 500 Stocks to Buy According to Analysts.Analyst Downgrades Netflix (NFLX) From 'Buy' to 'Hold'
Netflix, Inc. (NASDAQ:NFLX) is one of the world’s leading entertainment services offering TV series, films, games and live programming across a wide variety of genres and languages.
On April 27, Erste Group downgraded Netflix, Inc. (NASDAQ:NFLX) from ‘Buy’ to ‘Hold’, without assigning the stock a price target. The analyst firm expects the company to grow its revenue by 12%-15% this year, indicating a lower growth rate compared to 2025. Erste sees a “significantly higher” valuation for Netflix compared to the rest of the sector, limiting further potential upside for the stock.
Netflix, Inc. (NASDAQ:NFLX) is targeting a revenue growth of 12% to 14% for full-year 2026, with an operating margin expected at 31.5%. This includes the company’s goal of roughly doubling its advertising business to about $3 billion. It also needs mentioning that Netflix authorized an additional $25 billion in share repurchases on April 22. This builds on the approximately $6.8 billion already available for repurchase as of March 31 under the company’s December 2024 buyback program.
While we acknowledge the potential of NFLX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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- The Dealmaking 3: LIV Golf Funding, UFC in Australia, ESPN & Disney Take Back Sports
May 5, 2026
Watch The Dealmaking 3 of the Week:
This week of The Dealmaking 3 with “The Sports Professor” Rick Horrow features Saudi Arabia’s Public Investment Fund ending its funding for LIV Golf after the 2026 season following a projected $6 billion investment with $600 million in losses for 2024 alone, the UFC delivering its third consecutive Fight Night on Paramount+ from the RAC Arena in Perth, Australia and ahead of the 2032 Brisbane Olympics, and ESPN and Disney finishing their three-week Youth Sports Week as part of the Take Back Sports initiative which reached 1 million young athletes the first year.
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