Should You Buy Netflix Stock After Its Recent 32% Plunge?

Core Viewpoint - Investors have a unique opportunity to purchase Netflix stock at a significant discount despite its recent stock decline, which may present a favorable long-term investment opportunity [1][2][13] Company Performance - Netflix operates the largest streaming platform globally with over 300 million paying members, leveraging its scale and profits to outspend competitors on content creation and licensing [1] - The stock has decreased by 32% from its mid-2025 peak but has increased by 84,837% since its IPO in 2002, indicating potential for future gains [2] - Netflix's earnings per share over the last four quarters were $2.39, resulting in a price-to-earnings (P/E) ratio of 38, which is below its three-year average of 44.8 [8] Strategic Initiatives - Netflix launched a new ad-supported subscription tier at $7.99 per month, which has been successful, accounting for about half of new signups in available markets [2][3] - The company is investing heavily in high-quality content, including live sports, to attract new subscribers and increase advertising revenue [4] - Netflix plans to acquire Warner Bros Discovery for $82.7 billion, which would enhance its content library significantly, including popular franchises like Harry Potter and DC Entertainment [6][7] Future Outlook - Wall Street estimates suggest Netflix could achieve earnings of $3.23 per share in 2026, leading to a forward P/E ratio of 28.1, indicating potential stock price growth [8][10] - The advertising business is expected to continue growing, with revenue doubling in 2024 and projected to double again in 2025 [11][12] - The pending acquisition of Warner Bros presents some uncertainty, but the company is already performing well, and the acquisition could further enhance shareholder value [13]