Netflix Stock's Sell-Off Just Got Even Worse. Here's Why I'm Still Not Buying the Dip.

Core Insights - Netflix's fourth-quarter results showed strong revenue growth and operating margin expansion, yet shares fell approximately 5% post-report due to concerns over future growth guidance [1][2][3] Group 1: Positive Aspects of Q4 Results - Netflix's fourth-quarter revenue increased by 17.6% year-over-year, up from 17.2% in the previous quarter [3] - The operating margin improved to 24.5%, compared to 22.2% in Q4 2024, indicating operational efficiency [3] - Earnings per share rose by 30% year-over-year to 56 cents, reflecting strong profitability [3] - Free cash flow for Q4 2025 was approximately $1.9 billion, an increase from $1.4 billion in Q4 2024 [4] - Advertising revenue for 2025 was reported at $1.5 billion, 2.5 times that of 2024, contributing over 3% to total revenue [4] - The company surpassed 325 million paid memberships, showcasing its extensive market reach [5] Group 2: Concerns and Disappointments - Management's guidance for 2026 indicates a slowdown in constant-currency revenue growth to 11% to 13%, compared to 14% to 17% for 2025 [8] - The forecast for 12% to 14% year-over-year revenue growth in 2026 appears less optimistic when compared to previous guidance [6][7] - The stock's premium valuation, with a price-to-earnings ratio in the mid-30s, may lead to further sell-offs due to the slower growth outlook [9] - If 2026 revenue growth is at the high end of the new forecast, it would only be 13%, a significant drop from 17% growth in 2025 [9]