This year hasn’t treated Netflix’s (NFLX) stock well, and it is down over 18% year-to-date (YTD). It peaked above $108 in April ahead of its Q1 2026 earnings. However, that report triggered a selloff in Netflix, as did the next one. Incidentally, the company did not raise its 2026 guidance in either release, which dampened sentiment and raised fears of a slowdown in the back half of the year.
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Netflix Stock Trades Well Below Its Record Highs
To be sure, Netflix hasn’t had a linear decline this year, and the stock has had its moments. It rallied in late February after the company announced that it was walking away from the bidding war for Warner Bros. Discovery’s (WBD) assets. It did not hurt that Paramount Skydance (PSKY) paid a $2.8 billion breakup fee to Netflix for stepping aside from the deal. NFLX hit its 2026 lows following its Q2 2026 confessional but smartly rallied from those levels, in part aided by the disclosure that Bill Ackman’s Pershing Square Holdings (PSHZF) took a stake in Q2.
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Notably, NFLX hit its all-time highs in late June 2025 and currently trades almost 43% below those levels. Since Netflix’s earnings have risen over the period, its valuation has taken a beating amid the drawdown. The stock currently trades at a forward price-to-earnings (P/E) multiple of 21.78x with a P/E-to-growth (PEG) multiple of 1.1x. I find these levels quite attractive and used the recent fall to add to my position in the streamer. Here is my bullish thesis for NFLX stock.
Why Has Netflix Stock Fallen This Year?
Let’s begin by looking at some factors weighing on NFLX this year and examine how much of a challenge they really are. First, there are concerns over the drop in Netflix’s engagement numbers. It did not help that the company said it would reduce the frequency of its “What We Watched” report from biannual to annual. Netflix Co-CEO Greg Peters sought to dismiss these fears, and during the Q2 call, he said, “All hours are not created equal,” specifically pointing to live events, which don’t drive watch hours proportionally to the content spend but are a great customer acquisition tool.
Rising competition from other streamers as well as short-form videos has also been a concern for markets. While short-form videos do compete for viewers’ time share, I don’t believe they could take much share from Netflix even in an era where attention spans are getting smaller by the day. Netflix has a strong moat over its competitors with its quality content and wide global library and is the undisputed, albeit undeclared, winner in the streaming war.
