Cathie Wood’s Ark Invest has purchased Netflix (NFLX) shares for the first time after the stock experienced a 10% decline following its third-quarter earnings report. The ARK Next Generation Internet ETF (ARKW) acquired 15,756 shares, valued at approximately $17.5 million, indicating a 0.77% allocation, which makes it the fund’s 40th largest holding.
Despite missing revenue expectations due to one-time charges from a tax dispute in Brazil, Wood’s investment suggests a belief in Netflix’s long-term prospects, even amid short-term market fluctuations.
Yet, given the relatively modest size of the investment, this seems more like a tactical move than a high-confidence endorsement. It’s also worth noting that Wood’s ARKW ETF has seen over a 100% rise in the past year, allowing managers some leeway to make calculated risks with fundamentally solid growth stocks.
Now, is Netflix stock a good buy right now?
Is NFLX stock a good buy now?
In the September quarter, Netflix achieved record viewership share in both the US and UK, demonstrating that audience engagement is growing, even with increased competition in the streaming market.
The company also reported record advertising sales for the quarter and is on target to more than double its ad revenue for the full year. Still, Netflix refrained from disclosing specific figures for its advertising business, leading many analysts to believe that subscription fees will largely drive revenue growth moving forward. Earlier this year, Netflix showed its pricing strength by raising prices across various plans, including those with ad support.
As for content, the fourth-quarter schedule features major franchises aimed at keeping subscribers engaged. The concluding season of Stranger Things is anticipated alongside new series like The Diplomat and No One Wants This. Notably, a big-budget film from Guillermo del Toro and Rian Johnson is also in the mix. In terms of its productions, Netflix highlighted KPop Demon Hunter, which has amassed over 325 million views, becoming the most-watched film in the platform’s history.
Additionally, Netflix has announced collaborations with Hasbro and Mattel to develop consumer products based on KPop Demon Hunter. These products are slated to hit stores in spring 2026 as Netflix looks to expand its revenue streams beyond just subscriptions. The company is also considering opportunities in joint ventures, like live events, publishing, and even food and beverage sectors.
Netflix reaffirmed its full-year revenue outlook of $45.1 billion, reflecting a 16% growth. However, it has adjusted its operating profit margin forecast from 30% to 29%, impacting earnings projections also due to the Brazilian tax situation.
Despite controlling a mere 7% of consumer entertainment spending and 10% of TV viewing time in its largest market, Netflix still has ample opportunities for growth, even in light of temporary financial setbacks.
Is NFLX stock still undervalued?
Projections indicate that revenue from NFLX could rise from $39 billion in 2024 to $68.4 billion by 2029, with adjusted earnings per share expected to grow from $19.83 to $54 during the same time frame. Currently, the stock trades at a forward P/E ratio of 36.6x, which is just below its five-year average of 38x. If the valuation were to adjust to a forward P/E ratio of 30x, the stock might reach approximately $1,620 by early 2029, suggesting a potential 45% upside from where it is today.
Among the 47 analysts covering NFLX stock, 30 have given a “strong buy” recommendation, three have suggested a “moderate buy,” while 13 rated it a “hold,” and just one labeled it a “strong sell.” The average price target stands at $1,332.05, well above the current stock price of $1,102.34.
