Is Netflix a Good Buy? After 10 Years of Covering NFLX, Here's My Honest Answer.

Over the past ten years, Netflix's (NASDAQ: NFLX) stock has rallied 670% and outperformed the S&P 500's (SNPINDEX: ^GSPC) 260% gain. I regularly covered Netflix throughout that decade, but I alternated between bullish and bearish positions. I also never bought the stock.

While I admired Netflix's evolution from a DVD rental company into a streaming video giant, I was concerned about its competitive threats, rising expenses, and high valuation. Today, I'll take a fresh look at those strengths and weaknesses to decide if it's a worthwhile investment.

Image source: Getty Images.

Why did Netflix pull back from its all-time high?

Netflix's stock closed at a record high of $133.91 per share on June 30, 2025. But as of this writing, it trades at about $77. Several changes and challenges caused that pullback.

For many years, investors tracked Netflix's growth by its subscriber count. But starting in the first quarter of 2025, Netflix stopped reporting those subscriber numbers. It claimed its overall subscriber numbers were becoming less relevant, since the introduction of its ad-supported and paid sharing plans changed the value of each subscriber. Netflix also plans to start disclosing its engagement and viewing hours just once a year (rather than twice) in 2027. Those jarring changes suggested that Netflix's high-growth days were over.

Netflix claims that its revenue, operating margin, and free cash flow (FCF) provide investors with a clearer picture of its overall growth. However, Netflix's year-over-year revenue growth decelerated over the past two quarters, while its FCF turned negative in its latest quarter.

Data source: Netflix. YOY = Year-over-year.

Netflix expects its revenue to only rise 11.7% year over year in the third quarter. That slowdown can be attributed to the fading impact of its paid sharing plans, the saturation of its top markets (especially the U.S. and Canada), the slower-than-expected expansion of its ad-supported tiers, and a lack of new price hikes following its aggressive, multi-tier increases in 2024 and 2025.

Netflix also released more hit shows (Stranger Things, Squid Game, and Wednesday) and movies (K-Pop Demon Hunters) in 2025. Those tough year-over-year comparisons are exacerbating its slowdown, and its FCF is declining as it ramps up its spending on new content.

Another red flag was Netflix's attempt to buy Warner Bros. Discovery (NASDAQ: WBD) for $83 billion. Although it ultimately lost that bidding war to Paramount Skydance (NASDAQ: PSKY) in February (which boosted its first-quarter FCF with a $2.8 billion breakup fee), that bid indicated it was running out of room to grow organically. That's troubling because Netflix is often known for creating new hit IPs rather than acquiring existing ones.

Is Netflix still worth buying today?

From 2025 to 2028, analysts expect Netflix's revenue and EPS to grow at CAGRs of 12% and 22%, respectively. It isn't growing as rapidly as it did over the past decade, but it's still growing faster than traditional media companies like Paramount and Disney.

Netflix's stock also looks reasonably valued at 21 times next year's earnings. At its all-time high last October, it was trading at 37 times this year's earnings. That high valuation was unsustainable, since Netflix shouldn't be valued as a high-growth tech stock, but its current valuation seems fair for a higher-growth media company.

With over 300 million paid global members (as of the end of 2024), a growing content catalog, and the scale to generate stable profits from a capital-intensive business model, Netflix remains a solid long-term investment. It probably won't replicate its gains from the past decade over the next ten years, but it will remain a top play on the streaming media market.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix, Walt Disney, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.