Don't Sell Netflix: NFLX Is the One Streaming Pick I'd Add to Today

When a stock you own starts trailing the market, it can make you question why you own it. In 2026, anything not deemed an artificial intelligence (AI) "winner" has likely lagged the S&P 500 index. One stand-out laggard is Netflix (NASDAQ: NFLX).

The streaming mainstay is down around 50% from highs, while the market is up 13% year-to-date (YTD). Should you sell your Netflix stock? Here's why I think its growth opportunity and valuation mean investors should stick with this long-term winning stock.

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Sustained global growth

Netflix has a narrative that the company is ripe for disruption by social platforms like Alphabet's YouTube and AI-generated content. So far, this has not impacted its financial performance.

Revenue was up 13% year over year last quarter to $12.6 billion, with stable profit margins. The company no longer reports overall subscriber figures, but it appears the business continues to gain market share in global video streaming. In Asia and Latin America, constant-currency revenue growth exceeded 15%.

Total watch hours grew only 2% year over year in the first half of 2026, but this figure is better than it looks because the World Cup was happening in the second quarter, which Netflix had no rights to. For the long term, Netflix is investing to diversify its content library by adding sports, interactive streaming videos, and live talk shows, including popular podcasts.

Better positioning vs. peers

By selling this content to a global subscriber base, I believe Netflix is in a much better position than its peers to profit from video streaming. Legacy players like Paramount Skydance or Disney have struggled to gain share in video streaming and have much worse balance sheets than Netflix.

With around half of the United States' watch hours going to streaming today, and even less in some international markets, Netflix should have a sustained demand tailwind to reinvest in while laggards scramble to turn a profit. This is why the company could steadily compound its revenue.

We cannot forget advertising, either, where Netflix is best positioned among all video streamers to grow. Netflix was late to the advertising game, but has recently made a push for cheaper ad-supported subscription tiers to drive more engagement and revenue. It is a small part of the business today, but it should help accelerate revenue growth in the years ahead and give the company more capital to reinvest in areas such as sports rights.

NFLX PE Ratio data by YCharts

A low price and capital returns story

Netflix was in a bidding war for Warner Bros. Studio earlier in 2026. It was planning to buy out the storied production studio for $83 billion before losing in a bidding war to Paramount Skydance. While the deal would have added to its streaming library, investors were unhappy that Netflix entered the bidding war and began selling the stock as a result.

Now, without Warner Bros., Netflix can take its cash and start repurchasing stock at a much lower price. Its outstanding shares have fallen by 6% since beginning its buyback program, which should accelerate given its lower share price. The company used $4.7 billion to repurchase stock in Q2 alone. Apply that over a full year, and Netflix could retire 7% of its outstanding shares at its current market cap of $280 billion.

Right now, Netflix trades at a price-to-earnings ratio (P/E) of 21, which is one of its lowest levels in history. For a business that is growing revenue in the double digits and retiring its outstanding stock, this should lead to solid teen-level earnings per share (EPS) growth in the years ahead. Compared to its P/E ratio, Netflix stock looks very cheap today. Don't sell into this drawdown.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.