NFLX Stock: The Streaming King Fell 42% — Time to Buy Netflix?

Netflix (NFLX) Q2 2026 — Netflix (NFLX) reported Q2 2026 revenue of $12.56B, up 13.4% YoY (roughly in line), with EPS of $0.80 (a penny beat) and a 33.4% operating margin. But the stock fell ~8% after hours on soft Q3 guidance (revenue +11.7% to $12.86B, below ~$13B hoped). It maintained FY2026 guidance (revenue $51.0-51.4B, 31.5% operating margin). Split-adjusted, the shares (~$74) sit near their 52-week low, down ~42% from the high (~20% YTD) — cheap by Netflix's own history at ~20x forward, with ad revenue on track to roughly double to ~$3B. Netflix spent years as the market's untouchable darling — and it's now down about 42% from its high, split-adjusted near $74, punished again and again on guidance. Q2 2026 was in line (revenue +13.4% to $12.6B, EPS $0.80, ~33% operating margin), but soft Q3 guidance (+11.7% vs ~$13B hoped) sent it down ~8% after hours. The core fear is deceleration: viewing hours rose just 2%, and Netflix is scaling back viewership disclosure. But this is still the best, most profitable streamer in the world, now trading around 20x forward — cheap by its own 30-40x history — with real levers left: advertising (revenue ~doubling to ~$3B this year, still early), continued price increases, and live/sports/gaming. It's a cash machine now, buying back stock at a 42%-off price. Our owner-earnings work lands fair value near $90 (vs $74), below the Street's ~$106 (65 of 99 analysts rate it Buy). Our call: BUY, 3/5 — a fallen king at a rare discount, if you can stomach a bumpy, show-me growth story. Watch engagement and the ad ramp above all. Not financial advice. THE CALL: BUY (3/5, THE FALLEN STREAMING KING — CHEAP, IF YOU CAN STOMACH SLOWING GROWTH) — base-case value ~$90 vs ~$74 today. What to watch: the advertising business inflecting faster than expected, or a quarter that simply beats the lowered bar (either would break the negative narrative and re-rate the multiple); the risk to watch is engagement — viewing hours up just 2%, and if they turn negative, pricing power erodes Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.