What Could Lift Netflix Stock From Here? Trefis Team Tue, November 10, 2026 at 6:34 PM EST 4 min read NFLX -1.30% DIS +0.07% AMZN +2.07% CMCSA +0.53% AAPL -0.75% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
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Netflix (NFLX) kept more of its sales as operating profit in the twelve months to September 2026 than at any quarter end since 2016, yet its shares lost 41.7% over the past year. You now pay 17.9 times those twelve months' earnings, compared with an average of 38.2 across the past twelve quarter-ends. If you buy at today's price, where in Netflix's business would a gain have to come from?
All Of Netflix's Upside Would Come From Higher Sales
Nearly all of Netflix's revenue comes from its core service, which pairs its own programming with shows licensed from other studios, and management said on the October 20 call that it sees a long runway for growth there.
Based on the assumptions below, Netflix shares purchased today would gain about 33.7% in three years. This scenario assumes revenue grows slightly slower each year than it did in the twelve months to September 2026, the P/E holds, and the net margin retreats part of the way toward its average at earlier quarter-ends. Today's figures are listed below alongside the projections for year three.
Higher sales account for more than the entire projected gain. The lower margin offsets a portion of it, and none of it comes from the P/E.
Where Would Netflix's Extra Sales Come From?
In markets where Netflix already has many members, management expects revenue per member and advertising to supply more of the revenue growth. In newer markets such as India, Indonesia and Colombia, management sees plenty of room to add members.
Recent price changes have gone well, including in the United States, management said. Third-quarter churn, the share of members who cancel, improved from a year earlier. Management added that the U.S. business is working but not growing as fast as it would like.
Netflix's ads business is growing fast, more than 80% in 2026, management said, but it is a bit behind the company's aggressive target for the year. In its October 20 release, Netflix lowered its fiscal 2026 ad revenue guide to $2.7 billion, from $3.0 billion in July. Management guided fiscal 2026 revenue to $51.1 billion. That guidance implies about 13.1% growth, close to the scenario's 13.2% a year. With three of that year's quarters already reported, though, the guide mostly repeats results.
How Netflix's Upside Changes Under Other Assumptions
The table below shows the upside when altering one assumption at a time.
Net margin of 22.0% in year three instead of 27.4%
The 22.0% margin in the table reflects Netflix's average twelve-month net margin across the twelve quarter-ends from September 2023 to June 2026. Today's net margin sits well above that average, which is why the scenario assumes a slightly lower margin in year three. That margin is helped by the first quarter, when net income of $5.28 billion topped operating income of $3.96 billion.
While Netflix's twelve-month revenue growth has held steady for three years, the rate slowed in each quarter of fiscal 2026. Revenue grew 16.2% from a year earlier in the first quarter and 13.4% in the second. Third-quarter revenue grew 11.8%, trailing the yearly pace in the scenario, and management guided for 11.5% in the fourth quarter.
With the margin and P/E as assumed, revenue growth could slow from the 14.7% Netflix delivered over the twelve months to September 2026 down to 2.7% a year before three years of owning the stock return nothing. The net margin could fall from today's 29.7% to 20.5% before the same happens. The P/E could drop from today's 17.9 to 13.4 with the same result.
Netflix is expected to report its fiscal 2026 fourth-quarter results in January 2027. Management said it will provide 2027 guidance, including for margins, at that time. Revenue growth from a year earlier is the measure to watch in that report.
Does This Mean You Should Act On NFLX?
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