Should You Buy Netflix Stock Right Now?
Key Points
Netflix's miss of estimates was entirely due to a one-time $619 million Brazilian tax charge, resulting from an unexpected court reversal of earlier favorable rulings.
The market wiped $48.8 billion off Netflix's value over the tax issue.
This price correction creates a buying opportunity for growth-focused investors.
- 10 stocks we like better than Netflix ›
Netflix (NASDAQ: NFLX) stock has been soaring in recent years. At the end of Oct. 21, the stock price had more than tripled in two years, quadrupling the returns of the S&P 500 (SNPINDEX: ^GSPC) market index over the same period:
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
NFLX data by YCharts
But Netflix's momentum hit a brick wall that evening. The third-quarter earnings report missed Wall Street's bottom-line targets for the first time since January 2024. Investors slammed their "sell" buttons, and Netflix's stock fell 10.1% the next day on seven times its average daily trading volume.
Was that the end of Netflix's multiyear surge, or should investors see the price drop as a buy-in opportunity? I think it's the latter, and here's why.
Image source: Netflix.
The Brazilian tax bill that spooked investors
Netflix missed its own operating margin forecast by 3.3 percentage points, which works out to $380 million of lost operating profit. The company took a $619 million charge related to an ongoing tax dispute with Brazilian authorities, more than explaining the profit miss.
This was an unexpected expense because Netflix had won a court ruling in 2022 that cleared the company of this particular taxation. But a Brazilian supreme court ruling recently expanded the scope of this tax, making Netflix set aside some funds to account for this new liability. Other companies doing a lot of business in Brazil may face similar issues, and the matter is still pending lower-court challenges and tax calculation details.
The $619 million issue and the $49 billion panic
Netflix accounted for an unexpected $619 million tax payment, which is expected to be a one-time expense. In response, investors cut $48.8 billion off Netflix's market cap. That looks like an overreaction to me, though it's fair to say that the stock remains quite expensive anyhow. After the price correction, the stock is still up by a market-crushing 179% in the last two years.
So it's not a stock for price-sensitive value investors, but growth-oriented stock pickers could see this drop as a welcome buying opportunity.
Should you invest $1,000 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 $600,550!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,116,616!*
Now, it’s worth noting Stock Advisor’s total average return is 1,032% — a market-crushing outperformance compared to 192% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of October 20, 2025
Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
Recommended Articles
