Netflix Is Down 46% From Its High. Is This a Once-in-a-Lifetime Buying Opportunity Before the Stock Goes Parabolic?

Netflix Is Down 46% From Its High. Is This a Once-in-a-Lifetime Buying Opportunity Before the Stock Goes Parabolic?

Micah Zimmerman, The Motley Fool

Tue, September 1, 2026 at 5:50 PM GMT+3 5 min read

• NFLX -0.13%
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Netflix (NASDAQ: NFLX) stock closed near $82 last week, which leaves it down about 36% from its 52-week high of $126.71 and roughly 46% below its June 2025 all-time high. I do not think this is a once-in-a-lifetime setup, but it is the cheapest relative to its earning power that Netflix stock has looked in years.

The damage this year has been real. Netflix hit a 52-week low of $65.08 after July earnings, its lowest level since August 2024, and the stock entered that session already down roughly 20% year to date. It has since recovered to the low $80s.

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Still, the drawdown from the peak is near 36%, and the 52-week range of $65.08 to $126.71 shows how violent the repricing was. Let's see what this means for investors.

Why the money left Netflix

The core issue is deceleration. Revenue growth fell from 17.6% in the fourth quarter of 2025 to 16.2% in the first quarter of 2026 and 13.4% in the second quarter, with third-quarter guidance pointing to just 11.7%. Netflix guided to third-quarter revenue of $12.86 billion, against Wall Street's roughly $13 billion expectation, and EPS of $0.82, versus the $0.85 expected by analysts. The most profitable segment, the United States and Canada, slowed to about 10% growth after a partial-quarter price increase.

Strategy questions piled on. Netflix lost a bidding war for Roku in a deal worth roughly $22 billion and walked away from Warner Bros. Discovery assets earlier in the year. Reed Hastings stepped down from the board, and insiders sold nearly $130 million of shares over three months.

What the company is actually building

Beneath the sentiment, the business is executing on what matters most. The ad-supported tier has surpassed 250 million monthly active viewers, and management reaffirmed that ad revenue will roughly double to $3 billion in 2026. Netflix is expanding programmatic access this summer to capture smaller buyers and leveraging high-demand live inventory, including NFL games and WWE. Live events and games are moving from experiments into recurring programming.

Profitability is holding up. Second-quarter operating margin came in at 33.4% on revenue of $12.56 billion, with net income of $3.40 billion, up from $3.13 billion a year earlier. Full-year guidance is $51.0 billion to $51.4 billion in revenue, with a 31.5% operating margin.

Why capital could rotate back

Management is voting with the balance sheet. Netflix authorized a $25 billion share repurchase program, one of the largest in its history, and bought back about $4.7 billion of stock in the second quarter alone, its biggest quarterly buyback on record. At current prices, that program can retire a meaningful slice of the float.

Valuation is the other piece. The stock has fallen to roughly 19-22 times 2026 earnings estimates, well below the multiples it commanded for most of the past decade. Analysts still model earnings growth averaging 21% to 22% annually over the next three to five years.

Are we going to see a parabolic move?

This is not a once-in-a-lifetime buying opportunity, and I would be skeptical about anyone framing it that way. There will most likely be a bounce-back, but not a parabolic move. Netflix is a maturing business with genuine growth deceleration, and a parabolic move would require ad revenue to overshoot the $3 billion target and engagement to reaccelerate.

Instead, Netflix is a good business trading at a reasonable price for the first time in years. If ad revenue keeps doubling, margins hold near 31.5%, and the $25 billion buyback grinds the share count down, the setup works even with 10%-12% revenue growth rather than 20%. That is a solid long-term position.

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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix, Roku, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.

Netflix Is Down 46% From Its High. Is This a Once-in-a-Lifetime Buying Opportunity Before the Stock Goes Parabolic? was originally published by The Motley Fool