Netflix Stock's $80 Level: Should Investors Buy Stock Now?

The recent slide in Netflix shares toward the $80 mark has created an intriguing puzzle for equity investors. Here’s the paradox: the company’s underlying business appears to be executing exceptionally well, yet its stock has faced significant pressure. Before deciding whether to buy stock at current levels, it’s worth diving deeper into what the numbers actually reveal about both opportunity and risk.

The Business Momentum Behind Recent Stock Pressure

Netflix’s operational performance throughout 2025 delivered results that few media companies can rival. Revenue climbed 16% year-over-year to reach $45 billion, while the global subscriber base surpassed 325 million users. What makes this particularly noteworthy is that this growth rate represented a continuation of similar momentum from 2024, when the company also achieved 16% top-line expansion.

Beyond the headline growth figures, the composition of Netflix’s revenue expansion tells an equally compelling story. The company benefited from a combination of price increases and net subscriber additions across its paid membership tiers. Simultaneously, the advertising business—still in its early stages—demonstrated explosive growth, now accounting for roughly 3% of overall revenue. This diversification of income streams shows the platform is successfully monetizing its content ecosystem through multiple channels.

Perhaps most impressively, Netflix achieved this substantial growth while simultaneously expanding its operating margins. The company improved its operating margin from 26.7% in 2024 to 29.5% in 2025, demonstrating that revenue growth is translating directly into bottom-line profit improvement. For 2026, management is projecting this positive momentum will persist, forecasting revenue growth in the 12-14% range combined with further operating margin expansion to 31.5%.

Worth noting: Netflix provides what it describes as its “actual internal forecast” rather than a conservative guidance framework. This approach aims for accuracy, meaning actual results occasionally fall short of projections—a distinction worth keeping in mind when evaluating forward guidance.

Evaluating Netflix’s Current Valuation Through Forward Multiples

Despite the company’s impressive financial trajectory, stock valuations tell a different story. Shares have declined approximately 10% since the start of 2025 and roughly 40% from peaks reached in the summer months. The disconnect between business strength and stock performance raises a critical question about whether current pricing represents opportunity or risk.

When examining Netflix’s valuation, the traditional price-to-earnings ratio presents a somewhat unflattering picture. At the current $80 stock price, the P/E multiple stands around 32x. For investors accustomed to evaluating mature tech companies, this number might suggest the market has priced in extraordinary expectations. However, relying solely on trailing or current-year P/E ratios may not tell the complete valuation story for Netflix.

A more nuanced approach involves examining the forward price-to-earnings multiple—calculated using analysts’ consensus earnings forecasts for the next 12 months. This metric becomes particularly relevant for Netflix because management expects operating margins to continue their rapid expansion trajectory in 2026. When strong revenue growth (12-14% expected) combines with expanding profit margins, the resulting earnings-per-share growth significantly outpaces top-line growth.

Netflix’s forward P/E multiple currently sits around 26x. For a company that generated 16% revenue growth last year while simultaneously improving operating margins by 280 basis points, this represents a more digestible valuation level than the traditional P/E might suggest. Looking ahead, the combination of double-digit revenue growth and margin expansion from 29.5% to 31.5% in 2026 creates a scenario where earnings growth could potentially reach 20%+ annually—a dynamic that forward multiples are specifically designed to capture.

Yet even with this more favorable lens, investors should consider whether current valuation leaves sufficient room for disappointment. The stock’s forward multiple still prices in expectations of sustained, robust performance, leaving limited cushion if execution falters.

Intensifying Competition Clouds the Investment Picture

Netflix management itself has been candid about the competitive environment, repeatedly describing the landscape as “intensely competitive.” This assessment extends beyond traditional streaming rivals. The company competes against the full spectrum of consumer entertainment choices—social media platforms, gaming services, sports programming, and countless other leisure activities vying for viewer attention.

The management team recently highlighted specific competitive dynamics worth monitoring. YouTube, under Alphabet’s ownership, has been progressively expanding its television and live sports offerings, directly encroaching on Netflix’s traditional territory. Amazon’s extensive library of original series and films presents another formidable alternative. Meanwhile, Apple’s streaming service, though often overlooked, has been quietly accumulating premium content and building subscriber momentum—representing what many analysts view as an emerging but serious competitive threat.

Television consumption patterns themselves are evolving rapidly. Competitive boundaries that once seemed clear-cut have become increasingly blurred. This shifting landscape means Netflix cannot simply rest on its current market position; sustained success requires continuous content investment and innovation to maintain subscriber engagement and pricing power.

The intensity of competition directly impacts valuation risk. While the business today performs strongly, competitive pressures could compress subscriber growth rates, limit pricing flexibility, or force increased content spending—any of which could derail margin expansion and justify lower valuations.

The Case for Holding Back on Stock Purchases Today

Synthesizing the fundamental strength with competitive headwinds reveals a nuanced investment scenario. The business metrics are genuinely impressive. Management’s forward guidance appears credible given the company’s track record. Yet the stock’s valuation—even after recent declines to the $80 level—doesn’t appear to offer meaningful margin of safety to compensate for the competitive risks the company faces.

When evaluating whether to buy stock at current levels, investors should recognize that Netflix remains a business of significant quality executing at a high operational level. However, quality and strong execution alone don’t automatically constitute a compelling investment if the price already reflects those positive attributes. The forward P/E multiple suggests that the market has already incorporated expectations of sustained outperformance, leaving limited room for surprises.

For value-oriented investors seeking to buy stock in companies trading at discounts that provide genuine downside protection, Netflix at $80 may not yet offer that security blanket. The stock’s current positioning appears more suited for existing shareholders evaluating hold decisions rather than new investors seeking entry points. As competitive pressures and execution risks remain material considerations, a more compelling valuation may emerge if market conditions shift or the company faces temporary headwinds.