Netflix Stock Is Pricey Even After Warner Bros.-Induced Selloff

Core Viewpoint - Netflix shares have declined by 27% since October, raising concerns about their valuation despite historical trading multiples suggesting they could be considered cheap [1][4]. Valuation Comparison - Netflix shares are currently trading at approximately 28 times expected earnings over the next 12 months, which is higher than competitors like Walt Disney Co., Amazon.com Inc., and Alphabet Inc., as well as the S&P 500 and Nasdaq 100 indexes [3]. - In contrast, Paramount Skydance Corp., which is also pursuing Warner Bros., trades for less than 13 times forward earnings [3]. Historical Context - Over the past five years, Netflix's average trading multiple has been 34, indicating that current valuations may be lower than historical averages [4]. Recent Performance - The stock has lost a third of its value since reaching a high on June 30, with a significant drop of 10% on October 22 following an earnings report that raised growth concerns [5]. - Netflix is currently the fourth-worst performer in the Nasdaq 100 since the end of June [6]. Market Sentiment - Shareholders have expressed skepticism regarding Netflix's bid for Warner Bros., which is valued at $82.7 billion, due to concerns about costs, potential regulatory issues, and Netflix's limited experience with large mergers [5][6]. - Analysts have described Netflix as "dead dollars for investors," citing a lack of explicit guidance for 2026 as a significant concern [7].