Netflix Stock Has Been Cut in Half Since Its 2025 Peak. History Says What Came After Its Last 5 Drops Like This.

Shares of Netflix (NASDAQ:NFLX) trade near $63 as I write. That puts the stock about 53% below its $133.91 closing high from June 30, 2025 (adjusted for the streaming giant's 10-for-1 stock split last November).

The stock first closed more than 50% below that peak on Oct. 21, the day after the company's third-quarter results.

And it's not the first time. Using split-adjusted daily closes since Netflix's 2002 IPO, I find five earlier times shares closed at half a record or less -- in 2002, 2004, 2008, 2011, and 2022.

What came next depended a lot on how long investors hung on. A year after crossing the 50% mark, the stock was higher just twice.

But three years on, it was up four times out of five, and three of those gains cleared 200%.

Image source: Netflix.

Three years beat one

The two quick winners came first. After crossing the line on Oct. 2, 2002, Netflix stock climbed 406% in the next year. After its Oct. 24, 2008, crossing, it rose 191% in a year. Both runs kept going, too, with the stock up 558% and 527%, respectively, three years after each crossing.

The other three began badly. Netflix stock was down 0.3% a year after its July 26, 2004, crossing, down 60% a year after Sept. 19, 2011, and down 9% a year after March 8, 2022.

Patience paid off in two of them. Three years on, the 2011 and 2022 crossings showed gains of 218% and 154%, respectively. Of course, the 2004 drop never made it, and the stock was still down 6% three years later.

In other words, the median return for someone buying at the halfway mark was about flat after one year and a 218% gain after three.

Was the halfway mark ever the bottom?

Rarely. In four of the five cases, Netflix kept dropping by at least another third after it crossed 50%. Shares shed another 63% after the 2011 crossing, bottoming in September 2012, and another 51% after the 2022 crossing, bottoming that May.

Only in 2008 did the stock bottom nearly right away, with its lowest close coming three days later, around 5% under the crossing.

The two quickest rebounds also happened in marketwide crashes. When Netflix crossed the 50% mark in October 2002 and October 2008, the S&P 500 (SNPINDEX:^GSPC) was around 46% and 44% under its record close, respectively. Put simply, stocks across the market had already fallen hard, and Netflix rebounded with them.

This drop is different. On Oct. 21, when Netflix crossed the line, the S&P 500 closed less than 1% under its record.

That suggests this slide is mainly about Netflix itself, which arguably makes it more like the three cases where the first year went badly.

Netflix is in better shape than it was in 2022

Still, Netflix's business looks far healthier than it did in 2022. Around six weeks after the 2022 crossing, Netflix said that it had lost 200,000 paid memberships in the first quarter. It forecast losing another 2 million in the second.

Profits, by contrast, are rising now. Management expects an operating margin of 31.5% for 2026, up from 29.5% in 2025, and says that implies operating income growth of more than 20%. Netflix also bought back $4.8 billion in stock in the third quarter, a company record. And its diluted share count dropped around 3% year over year.

Revenue growth, though, keeps slowing. Management's fourth-quarter forecast calls for revenue growth of around 11.5%. That'd be the fourth straight quarter of slower growth, down from 17.6% at the end of 2025.

Netflix is also a far bigger company now, with a market value of around $264 billion. Even the smallest of the four three-year gains, 154%, would push the stock to about $159 a share by late 2029 -- about 19% over its record. It's possible, but I think it'd take more than a business growing sales at around 12% can usually manage.

Does this history make Netflix stock a buy today?

I think it favors patience more than a quick bet. The one-year record is weak, and the shares might keep sliding for a while, as the halfway mark usually hasn't been the bottom.

But the three-year record is strong, and the business looks healthier than it did in 2022. At around 17 times 2027 earnings (using analysts' average estimate), the stock is close to the $60 I've said I'd pay. Near that price, I'd consider buying bit by bit over the next year instead of all at once.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.