Netflix Is Down 46% -- Here's Why I'm Buying More
2026-07-31 13:30
•Adam Levy •The Motley Fool
•• • Axe Cap view
Netflix Sell-Off Looks Like a Buying Opportunity
Despite a 46% drop, Netflix’s cash flow and subscriber growth merit a closer look from investors.
Netflix’s recent 46% plunge has turned heads, especially as earnings growth slowed and management pulled back on sharing viewer stats. Yet, the market might be overreacting. The business reliably generates $12.5 billion in free cash flow annually—that’s real cash, not just paper profits. Their content spend hasn’t lost effectiveness, and the subscriber base keeps inching up, now close to 325 million worldwide. Plus, advertising income, set to hit $3 billion, offers a fresh growth path. Trading at 28 times free cash flow, it’s attractive compared to many tech peers. For South African investors, this is less about direct JSE plays—Netflix isn’t listed locally—but the rand/dollar rate could shift if global tech sentiment turns, so keep an eye on USD/ZAR as a proxy for risk appetite. This call isn’t foolproof: the streaming market is cutthroat, and increased content costs or slower ad uptake could hit margins hard. this is just our opinion and not financial advice
I’m adding Netflix incrementally on dips, valuing cash generation and subscriber momentum over short-term volatility. South African investors should monitor USD/ZAR since local exposure is indirect.
- NFLX
- USD/ZAR
- Higher content costs eroding margins
- Slower growth in advertising revenue
6/10
Netflix stock has declined 46% from its peak as earnings growth slowed and management reduced disclosure on viewer engagement. However, the author argues the sell-off is excessive, highlighting Netflix's strong free cash flow generation of $12.5 billion annually, effective content spending, growing subscriber base of 325 million, and expanding advertising revenue. With the stock trading at 28x free cash flow and potential for significant future growth, the author views it as an attractive buying opportunity.
Our take is based on reporting first published by The Motley Fool.