Down Roughly 50% From Its Highs, Is Netflix Stock Finally a Buy?

After hitting an all-time closing high of $133.91 on June 30, 2025, Netflix (NASDAQ: NFLX) shares are down roughly 50% following the streaming giant's third-quarter earnings report. The stock's multiple compression, meanwhile, finally makes it look like a buy, despite slightly slowing revenue growth.

The video streaming company reported its third-quarter results after the closing bell on Oct. 20, which led the stock to continue its descent. The stock has been basically flat over the past five years. Let's dig into Netflix's results and prospects to see why it looks like a buy.

Making changes

It was probably pretty obvious before Netflix's report that the streaming giant wouldn't post blockbuster earnings, since it fired its chief content officer and announced its largest layoff since 2022 days before the report. It hired former Walt Disney executive Peter Rice for the role, whom the company praised for his expertise in "talent relations."

While Netflix has said its international content has been performing well, it has struggled recently to deliver big blockbuster shows in the U.S. that tend to get people talking and draw in new subscribers. In fact, there has been a narrative that the company is trying to appeal to too broad a user base (something-for-everyone shows), which has been hindering it from developing its next blockbuster. In a competitive market for talent, Netflix thinks Rice can help make it the place top creative talent wants to work with in the future.

By pivoting back to creator-friendly, quality-focused development, Netflix hopes to deliver more entertainment value to its members. It is also looking to leverage technology, continue to improve its adtech stack, and improve monetization. As such, it plans to launch ad tier subscriptions in 15 new countries next year, including nine in EMEA (Europe, the Middle East, and Africa), two in South America, and New Zealand.

For Q3, Netflix saw solid growth, with revenue increasing 12% (11% in constant currencies) to $12.87 billion. Adjusted earnings per share (EPS) surged 49% to $0.87. Analysts on average had been looking for EPS of $0.82 on revenue of $12.87 billion, according to estimates compiled by LSEG.

Revenue growth was relatively consistent across regions. U.S. and Canada revenue rose 11% to $5.6 billion, while EMEA revenue grew 11%, or 9% in constant currencies, to $4.1 billion. Latin America revenue increased by 17%, or 12% excluding currency, to $1.6 billion, while the Asia-Pacific region saw revenue rise 12%, or 15% in constant currencies, to $1.5 billion.

Looking ahead, management guided for Q4 revenue growth of 12%, or 11% excluding currency, to $13.4 billion, led by membership growth, price increases, and ad revenue. For the full year, it slightly reduced its forecast to $51.1 billion, representing 13% growth (12% excluding currency). This was due to a slower rollout of certain ad capabilities, which reduced its full-year ad forecast from $3 billion to $2.7 billion.

Image source: The Motley Fool.

Why the stock looks like a buy

At a forward price-to-earnings ratio (P/E) of around 17 times analysts' 2027 estimates, Netflix is now at a valuation that is starting to look attractive and can draw the interest of GARP (growth at a reasonable price) investors. Revenue growth remains solid, and the company has the opportunity to accelerate it by making a slight shift in its content strategy.

International markets are already performing well, with strong growth in places like India and other parts of Asia. Meanwhile, the U.S. market just needs some more hit shows. Longer term, increased live events and sports, and the rollout of ad tiers to more countries should help drive its still-nascent ad business.

With the stock attractively valued and the company actively looking to turn around its fortunes, the stock looks like a buy at these levels.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.