Should You Buy the Netflix Dip?
Key Points
After a strong earnings report, Netflix's share price dropped 10% on news of tepid forward guidance.
Netflix's first-quarter revenue grew 16% year over year.
- 10 stocks we like better than Netflix ›
Netflix (NASDAQ: NFLX) delivered a strong first quarter, but the market was not happy about it. There seemed to be a disconnect between the numbers the streaming service presented and how investors ultimately feel about the forward guidance.
This led to the stock price plunging 10% on Friday, April 17. Long-term investors should see this sudden dip as a solid entry point into a company that's steadily expanding globally, rather than a warning sign of future weakness.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Investors who were upset with the lukewarm forward outlook are missing a bigger point. Netflix has a massive opportunity outside of the United States. The streamer has penetrated less than 45% of the total addressable market, leaving plenty of eyeballs to capture through subscriptions.
Image source: Getty Images.
Netflix's fundamentals are fully intact, and the Q1 2026 results are overwhelmingly positive. First-quarter revenue grew 16% year over year, and operating income was up 18%. Both of these results were slightly ahead of the company's guidance.
Netflix also saw a massive jump in free cash flow following the termination of the Warner Bros. Discovery deal, as Netflix was owed $2.8 billion if the deal didn't finalize successfully.
Netflix's stock has been relatively flat over the past 12 months. The company still trades at a slight premium with a forward P/E ratio of 34 and a PEG ratio of 2.25. Overall, Netflix is really well positioned to continue its organic growth worldwide.
Should you buy stock in Netflix right now?
Before you buy stock in Netflix, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $524,786!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,236,406!*
Now, it’s worth noting Stock Advisor’s total average return is 994% — a market-crushing outperformance compared to 199% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of April 19, 2026.
Catie Hogan has positions in Warner Bros. Discovery. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
Recommended Articles
