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Netflix (NASDAQ: NFLX) isn't just another stock to me. This one is special, and I still think it's a great buy in 2026.
It was one of the first stocks I ever bought, and the first business model I really understood. This was way back when the red mailers were disrupting Blockbuster's time-honored video rentals. In the summer of 2006, I spent weeks researching the home video industry, interviewing video store owners, and checking the film collections in every outlet I could find. Download services like Vongo and Movielink were promising, and so was the cable TV industry's video-on-demand option -- but those services never got the Hollywood support and huge catalogs they needed.
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Netflix stood apart with the largest movie catalog, the most convenient delivery service (if you didn't mind waiting for the mail), and unstoppable innovation. The company had "Net" in its name long before most home internet connections were fast enough to stream digital movies. Late fees? Nope, you must be thinking of Blockbuster and Movie Gallery.
Netflix's stock usually looked expensive, and traditionalists often argued that Netflix's newfangled ideas couldn't compete with decades-old studio traditions. Furthermore, earnings and free cash flows were typically negative in those days. It almost felt naughty to believe in Netflix and own the stock.
That didn't stop me from buying Netflix early and doubling down when the stock looked extra cheap. The shares I bought in October 2011, amid the Qwikster-related price drop, have gained 5,800% as of Oct. 13, 2026. The largest holding in my personal portfolio is -- you guessed it -- Netflix, even after my Micron shares soared 7,300% in a 15-year holding period.
That's all in the past, of course. You are more interested in why I still think Netflix is a good buy today. Fair enough.
I mean, Wall Street is backing away from Netflix's stock again. Share prices are down 42% over the last year and the stock trades at a modest 22 times trailing earnings.
It's not a full-blown panic, though. Analysts generally like the stock with a consensus "buy" recommendation and an average 1-year price target of $92 per share. That's 30% above current prices. And the bears are staying away. Only 2% of Netflix's shares are on loan to short-sellers. Still, the steep price drop and low valuation add up to a buying opportunity.
Remember when Time Warner CEO Jeff Bewkes compared Netflix's market position to the Albanian army trying to conquer the world? That was 2010, shortly before Netflix's drastic shift to online streaming.
Since then, Netflix has evolved into the largest media company by market cap. Time Warner was acquired, spun out, merged with Discovery, and then acquired again to form Skydance (NYSE: SKYD). In the last earnings report before the Skydance merger, Warner Bros. Discovery reported $149 million of net income on $8.7 billion in top-line sales. For the same period, Netflix generated $3.4 billion of net income on revenue of $12.6 billion.
And not just when compared to the crumbling Warner empire. The company also looks good next to Walt Disney, Lionsgate, the NBCUniversal division of Comcast, or the studio properties under Sony. Netflix is king of the Hollywood hills, and the rest of the industry can only hope to keep up.
The Netflix you see today is not at all the same company that earned my respect in 2006. The business plan keeps changing, usually for the better.
Streaming was a great idea. Producing tons of original content with large budgets and creative freedom? Another masterstroke. Management used to swear off ad-supported services, but the ad-based plan Netflix launched in 2022 should deliver about $3 billion of revenue this year. The company is livestreaming sports, growing its video game portfolio, and building real-world entertainment centers in a handful of American malls.
Not every swing will be a home run, and I honestly have no idea how Netflix's business plan will change over the next five years. Then again, neither do the leaders of Disney, Skydance, or Sony. Netflix is a Rule Breaker at heart, always ready to tear up tried-and-true methods and try something new.
So I don't mind that the stock price is down in 2026. I have no intention of selling my Netflix shares and locking in the recent price dip (and long-term gains). Instead, I see another wide-open buying window. The next time I have new money to invest, Netflix will be at the top of my list.
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Anders Bylund has positions in Micron Technology, Netflix, and Walt Disney. The Motley Fool has positions in and recommends Micron Technology, Netflix, and Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
Forget Selling Netflix: NFLX Is the Streaming Stock I'm Buying More Of was originally published by The Motley Fool
