Netflix Stock Is Cheap and It Has More Than 70% Upside Potential Here

What’s Ahead for Netflix?

Despite the recent weakness in Netflix’s share price, the company’s fundamentals remain solid. It is well positioned to deliver strong revenue and earnings led by continued membership expansion, pricing power, advertising monetization, and improving operating leverage.

For 2026, management expects revenue of approximately $51 billion to $51.4 billion, implying YoY growth of roughly 13%–14%. This outlook is primarily driven by membership growth and pricing, with advertising serving as an additional catalyst. Netflix expects advertising revenue to double to $3 billion, highlighting the increasing contribution of this business to the overall revenue mix.

Another important consideration is Netflix’s ability to grow revenue faster than content costs, which cushions its margins. In 2026, its content expense is projected to increase by 10%. While this is above the 8% average growth rate recorded over the past five years, it remains well below the revenue growth forecast. Moreover, it comes at a time when Netflix is expanding into new entertainment offerings.

Overall, Netflix’s solid content supports subscriber retention, reduces churn, and strengthens the company’s ability to raise prices. Its growing subscription revenue, disciplined content spending, and increasing advertising monetization suggest solid earnings growth ahead.

Here’s What the Valuation Indicates

NFLX stock’s valuation appears reasonable. Netflix currently trades at 20.8x forward earnings, below the premium multiples it has historically commanded. Although this valuation is still above that of Disney, Netflix’s large global subscriber base, recurring pricing power, and an advertising business that is becoming an increasingly important source of incremental revenue warrant a premium.

If Netflix can maintain double-digit sales growth, expand margins, and continue reducing its share count, the current earnings multiple could prove too conservative, supporting upside in the stock.

How High Could NFLX Stock Rise?

Wall Street analysts remain cautiously bullish on NFLX, with the stock carrying a “Moderate Buy” consensus rating. The average analyst price target of $95.09 represents approximately 22% upside from the stock’s closing price of $78.24 on Aug. 13.

Meanwhile, the highest price target of $135 implies approximately 73% upside over the next 12 months.

On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com