Is Netflix Stock a Buy With a Fresh Stock Split Behind It?

Core Viewpoint - Netflix has completed a 10-for-1 stock split, which has not changed its market value but has adjusted the share price to around $100, coinciding with significant growth in the company's business [1][8]. Business Performance - The company has experienced rapid revenue growth, with a 16% year-over-year increase in Q2 2025 and a 17% increase in Q3, driven by rising paid memberships, pricing, and a growing advertising business [2][3]. - Despite a decline in operating margin to 28% in Q3 from 34% in Q2, Netflix's profitability remains strong, and management indicated that the margin would have exceeded forecasts without a one-off Brazilian tax charge [4]. - The full-year outlook for operating margin is expected to expand to 28%, up from 27% the previous year, indicating continued profitability despite increased costs [5]. Future Outlook - Netflix is set to finish 2025 with a strong lineup of content, including the final season of "Stranger Things," which is anticipated to enhance viewer engagement and attract more subscribers and advertisers [6]. - Management is optimistic about Q4, expecting revenue growth of approximately 17% year-over-year, and projects total free cash flow of about $9 billion for the full year, even with ongoing investments in content and advertising technology [7]. Valuation and Market Position - Following the stock split, Netflix's market capitalization remains around $450 billion, with shares trading at over $100 each, reflecting a valuation of about 44 times earnings and 10 times sales, which is higher than many competitors [8][9]. - Traditional competitors like Walt Disney and Comcast have lower valuations but do not match Netflix's growth profile or profitability in streaming, justifying the premium investors are willing to pay for Netflix stock [10]. - Overall, Netflix is viewed as a strong business with a demanding price, suggesting that while shares are moderately attractive, any new investments should be cautious due to valuation risks in a competitive market [11].