Netflix has reportedly hit an impressive milestone with 325 million subscribers on its streaming platform.
This month, many of the biggest companies in America released their fourth-quarter 2025 results, giving investors a closer look at their performances. Netflix shared its financial results on January 20, highlighting not only its record-breaking subscriber numbers but also significant growth in its newer advertising sector.
However, despite this positive news, Netflix’s stock has seen a 36% decline since peaking in mid-2025. Investors seem to be pondering the viability of established businesses and the implications of a recently announced plan to invest $82 billion in acquisitions concerning Warner Bros. Discovery.
Since its IPO in 2002, Netflix’s stock has skyrocketed by 78,000%, indicating that the business is generally thriving. This recent stock dip could just be a momentary setback before another upward trend begins, presenting a rare chance for long-term investors to consider buying in. But, should they act now?
Netflix is not just resting on its success
Ending 2025 with over 325 million paying subscribers keeps Netflix well ahead of its main competitors, like Amazon Prime with 200 million and Disney+ at 131.6 million. But to maintain this lead, Netflix knows it must keep innovating, even exploring new pricing strategies to attract a broader audience.
In 2022, the company introduced a more affordable subscription tier at $7.99 monthly, supported by advertising, significantly lower than its Standard and Premium options, which are priced at $17.99 and $24.99 per month, respectively.
As Netflix’s subscriber numbers rise, the value of ad inventory increases, enabling the company to charge advertisers more over time. They’re particularly focusing on live sports, which includes everything from boxing to NFL games, since these tend to command higher ad prices.
Currently, Netflix’s advertising sector is thriving. In 2024, its revenue from ads doubled from the previous year, and then more than doubled again in 2025 to $1.5 billion. Even though this is just a small part of the overall $45.2 billion revenue, if the fast growth continues, it could play a crucial role in Netflix’s financial future.
Recently, Netflix disclosed plans to acquire Warner Bros. Discovery, the studio behind major franchises like Harry Potter and The Lord of the Rings, alongside famous shows such as The Sopranos, Friends, The Big Bang Theory, and Game of Thrones. Additionally, Warner’s rights to the DC Universe, including characters like Batman and Superman, could further bolster Netflix’s advertising revenues.
Yet, the acquisition raises questions among regulators about its competitive impacts. Warner Bros. is fourth in global streaming service rankings, leading some to worry about whether Netflix might become too dominant. The approval of this acquisition is uncertain, given these concerns.
Netflix is seeing attractive stock prices
The company reported earnings of $2.53 per share in 2025, resulting in a price-to-earnings (P/E) ratio of 33. This aligns closely with the current P/E ratio of the Nasdaq-100, which is at 32.6. Therefore, it’s reasonable to say that Netflix is valued appropriately compared to its technology peers.
Looking ahead, forecasts from Wall Street suggest Netflix’s earnings could rise to $3.12 per share in 2026, which would lead to a forward P/E ratio of just 26.6.
This implies that for Netflix’s stock price to keep its current P/E ratio of 33, it must increase by 24% within this year, signaling potential gains for investors. Of course, there will be some uncertainty as the market waits to see if the Warner Bros. deal will get approval, but even if that doesn’t happen, Netflix’s outlook remains bright.
The management anticipates that its advertising business will double in size once again this year. Moreover, Netflix is still committed to outspending its competition on content to remain the most appealing option for potential new subscribers. In light of all this, I think the recent 36% drop in Netflix’s stock could represent a solid buying opportunity.
