Netflix Stock Under Pressure: Is Now the Time to Buy?

Netflix finds itself in an unusual position — despite a strong start to 2025 with nearly 37% gains through mid-year, the streaming giant has faced mounting headwinds. Since the summer months, shares have contracted by approximately 27%, leaving investors to grapple with a fundamental question: should they seize this weakness to buy stock, or should they wait for further clarity?

The short answer depends on whether you view Netflix through the lens of near-term uncertainty or longer-term fundamentals. The company’s operational trajectory tells a compelling story, even as its valuation presents both risks and opportunities.

The Warner Bros. Deal: Why Wall Street Remains Nervous

The primary catalyst weighing on Netflix’s share price isn’t related to the company’s operating performance or macroeconomic headwinds. Instead, it’s the months-long pursuit to acquire the film and television assets of Warner Bros. Discovery (WBD), a deal that has pitted Netflix against rival Paramount Skydance.

From an investor perspective, this acquisition introduces several layers of uncertainty:

• Regulatory Timeline: How long might the antitrust review process extend if Netflix and Warner Bros. reach an agreement?
• Financial Impact: How will Netflix structure and finance such a substantial transaction?
• Strategic Fit: What concrete value would Warner Bros. Discovery’s content catalog bring to Netflix’s platform?

Here’s the reality: acquisitions introduce complexity that Wall Street historically dislikes. Unpredictability tends to create volatility, which explains why this deal has been a persistent drag on sentiment rather than a catalyst for optimism.

Beyond the Deal: Netflix’s Transformation Over Five Years

Investors fixated on the Warner Bros. uncertainty risk missing the broader narrative about Netflix’s business evolution. While the COVID-19 pandemic certainly provided a tailwind for streaming adoption, the company’s financial trajectory reveals something more sustainable.

Over the past five years, Netflix has demonstrated two critical achievements: accelerating revenue growth paired with expanding margins. This combination suggests the company has mastered efficient operations in a post-pandemic environment where subscription fatigue is real, yet retention remains strong.

The company’s strategic approach has been deliberate — continuous investment in content refreshes keeps subscribers engaged and reduces churn. This virtuous cycle creates powerful economics:

• Strong Subscriber Retention: Netflix has built genuine loyalty through content quality
• Profitable Unit Economics: Subscriber lifetime value continues to grow
• Operating Leverage: Revenue growth now translates directly into earnings expansion
• Strategic Optionality: These improved finances provide flexibility to pursue new avenues — whether advertising expansion, immersive entertainment ventures, or inorganic opportunities

This reinforcement loop represents Netflix’s true competitive moat, far more valuable than any single acquisition.

Valuation Analysis: Where Netflix Stock Looks Attractive

On the surface, Netflix’s forward price-to-earnings multiple of 27 might not scream bargain. However, context matters significantly. Netflix trades at a considerable discount compared to less profitable competitors within the streaming and entertainment sectors. Moreover, the stock is hovering near its cheapest valuation in five years based on forward earnings projections.

The market’s current pricing suggests investors are applying a significant “deal uncertainty discount” to Netflix’s shares. For patient investors willing to buy stock during this period of flux, the mathematical case becomes more compelling. The company’s underlying profitability and growth trajectory don’t justify such depressed valuations in a normalized environment.

Yes, volatility will likely persist as long as the Warner Bros. deal remains in limbo. But from a five-year perspective, buying during periods of maximum uncertainty has historically rewarded long-term investors in quality companies.

The Real Question: What’s Your Time Horizon?

Before committing capital, consider this straightforward framework:

If you’re focused on near-term catalysts and deal resolution, waiting for greater clarity makes sense. The regulatory process could extend months longer, creating continued volatility.

If you’re building a long-term position, Netflix’s combination of durable business dynamics, improving profitability, and historically attractive valuation presents a compelling opportunity to initiate or add to positions.

The company’s ability to retain subscribers, expand margins, and generate accelerating earnings provides a genuine safety net beneath current price levels. While the acquisition dynamics introduce noise, they don’t diminish Netflix’s operational strength or the quality of its business model.

For investors seeking to buy stock in quality companies at reasonable valuations, Netflix warrants serious consideration — not despite the current challenges, but because of the disconnect between its valuation and its fundamental trajectory.