David DriscollNetflix Inc.NFLXDON'T BUYJul 20, 2026

North American growth is slowing with its product saturated, though internationally it is growing nicely but it's lower margin. Also, it's seeing the classic transition from growth to value investors.. NFLX was a high-growth company at a high multiple, but has slowed down. It's a hold, because NFLX is a legitimate franchise, and the 20x PE is fair, though it likely will decline as growth investors exit. Also, movies and shows are a capital-intense business.

It's too cheap to ignore. Is down 44% in the past year, including -9% since reporting last Thursday. It's gone from market darling to pariah. Last week, sales missed expectations slightly and EPS came in-line. Worse, free cash flow was much lower than expected due to higher tax payments and termination fees when Warners walked away from the merger. Guidance for Q3 was lowered as was the full-year forecast. But it's on pace for 13-14% revenue growth this year with a 31.5% operating margin and $12.5 billion free cash flow Companies kill for these numbers. In Q2 2025, growth was 16%, and growth is now slowing down. Also, they stopped providing quarterly subscriber numbers in Q1 2025, which the market didn't like. They lack a show like Squid Games to drive subs growth. Subscribers have jump from streamer to streamer. Warners paid Netflix a $2.88 billion termination fee, but the street now sees that Netflix needed Warners more than vice versa. Overall, the stock has nearly been cut in half, so he's interested in it. Netflix bought back $4.7 billion in shares during Q2, the biggest ever, with $27 billion remaining to buy.  JP Morgan projects NFLX's compound annual growth rate to be 24% EPS, and 22% in free cash flow. NFLX trades at a discount to the S&P, though Nvidia does too as do others. If engagement keeps slower and revenue falls below 10%, shares will keep declining. However, this is not a broken company, but one of the best anywhere and its numbers are still better than most. Ad revenue this year should double to $3 billion. The gap between the economics between the ad and ad-free plans are narrowing. At 19x PE, you get a well-run company on sale. Part a tranche now and add more on more weakness.

He exited his shares before the quarter. NFLX continues to miss; NFLX said they're worried about growth. There is a more competition now. It's dead money. Paying for live sports will limit capital returns to shareholders and limit buying content. That said, it's a solid business and acts like a utility.

The buzz shows that people are watching now like House of the Dragon are not on Netflix. NFLX needs better content, though live sports is the easy answer like Monday Night Football. He sold his shares a few days ago.

The competition has never been greater. Content can be created cheaper and easier thanks to AI tools. NFLX trades at 18x PE vs. the market's 20x, but this discount should be wider. NFLX needs new content; it doesn't have a library like Disney.

He bought more on today's dip. Likes it because: 1) they're past the Warners deal/distraction; 2) they've increase prices the last two years, paying paid subscribers by 40-50 million. NFLX has pricing power. It trades at a 40-50% discount from recent highs. It's not a semi company up 80% in a month, but a quality company that acts like a utility at a cheap price compared to a year ago.

It was in an uptrend, then broke a low of $90. Is making lower lows and lower highs. The trend is definitely down. The chart is not basing, not finding bottom, so can't buy it until it bounces.

Used to be growth stock and is now a value stock. There's a quiet quitting of subscriptions, losing users to user-generated content in TikTok and YouTube while long-form content is dropping. Yes, there are turning to sports and live TV. NFLX is now a contrarian buy. They have levers to pull.

Downturn really started with bid for WBD, and investors got nervous. Earnings forecast to grow 20-25% over next couple of years. Pretty solid operating results, yet stock's challenged. Still a leader, still likes it. Need to be patient.

On the chart, interesting that it's right at the 200-week MA, which tends to be a really solid support level for high-quality businesses. Could be at the point where stock takes off.

He thinks Netflix will take a run at NBC-Universal and the market will love it. This would be a better deal than the Warners one.

The one-year chart looks terrible, but shares are back to where they were before they walked away from the Warner deal. This is a great time to get in before their next growth catalyst.

Down here, it's too cheap to sell, so let's wait for the quarter and see what happens.

New fears that it's missing the boat and needs to look for another asset. Missed on American guidance because it was front-end-loading content. Massive scale. Margins actually expanded last quarter from 29.5% to 31.5%. More subscribers, more ads (and revenue), more countries, more NFL. 

Secular growth, market leadership, economic buoyancy. Good quality compounder. Growing 15%, trades at 15x. If you're scared to buy it today, sell puts. No dividend.

It is largely mature in its North American subscriber base so growth is slow and that is their high margin area. The international base has growth but it is low margin. It is trading at a pretty high multiple of 40X earnings. It also has competition from elsewhere. People are moving more into shorts and this benefits YouTube which has twice the user base size as Netflix.