Netflix shares are down roughly 50% from their all-time closing high after the company's third-quarter report. The Motley Fool argues the lower valuation makes the stock look like a buy, even as revenue growth slows slightly and the company shifts its content strategy.
Netflix shares are down roughly 50% from an all-time closing high of $133.91 on June 30, 2025, following the streaming company's third-quarter earnings report. The Motley Fool's Geoffrey Seiler contends that the multiple compression now makes the stock look like a buy.
A new content chief and a strategy shift
Netflix fired its chief content officer and announced its largest layoff since 2022 days before the report. It hired former Walt Disney executive Peter Rice for the role.
The company has struggled recently to deliver big blockbuster shows in the U.S., even though it says its international content performs well. Netflix now plans to pivot back to creator-friendly, quality-focused development, and it plans to launch ad tier subscriptions in 15 new countries next year.
Q3 revenue rises 12% to $12.87 billion
Third-quarter revenue increased 12% to $12.87 billion, or 11% in constant currencies. Adjusted earnings per share rose 49% to $0.87, against analyst estimates of $0.82 compiled by LSEG.
U.S. and Canada revenue rose 11% to $5.6 billion. Latin America grew 17%, or 12% excluding currency, to $1.6 billion.
Management guided for Q4 revenue growth of 12% to $13.4 billion. However, it slightly reduced its full-year forecast to $51.1 billion because of a slower rollout of certain ad capabilities, which cut its ad forecast from $3 billion to $2.7 billion.
Valuation draws the interest of growth-at-a-reasonable-price investors
At around 17 times analysts' 2027 estimates, Netflix's forward price-to-earnings ratio is at a level that Seiler says is starting to look attractive. He points to strong growth in India and other parts of Asia, while the U.S. market needs more hit shows.
Source: The Motley Fool
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