October 22, 2026
Netflix (NFLX) Stock Price Falls As Q3 Earnings Stir Valuation Doubts
Netflix just reminded investors why expectations matter more than slogans. The streaming giant came into Q3 2026 with a reputation for relentless profit expansion and a trailing P/E around 18x that looked restrained against peers. Then the fresh report hit, the stock fell about 5% on the day, and the story turned to whether recent […]
Netflix just reminded investors why expectations matter more than slogans. The streaming giant came into Q3 2026 with a reputation for relentless profit expansion and a trailing P/E around 18x that looked restrained against peers. Then the fresh report hit, the stock fell about 5% on the day, and the story turned to whether recent margin strength is already fully priced in.
The headline is simple. Netflix delivered roughly US$12.9b in Q3 revenue and basic earnings per share of about US$0.89, while trailing 12 month net income sits near US$14.8b. The immediate price drop now clashes with a business still throwing off sizeable profits.
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• Revenue (Q3 2026 vs Q3 2025): US$12,874.2m vs. US$11,510.3m (up about 11.8%)
• Net Income (Excl. Extra Items, Q3 2026 vs Q3 2025): US$3,663.9m vs. US$2,546.9m (up about 43.9%)
• Basic EPS (Q3 2026 vs Q3 2025): US$0.89 vs. US$0.60 (up about 47.7%)
• Trailing 12 Month Net Profit Margin (Q3 2026 vs prior year): 29.7% vs. 24.0% (higher margin on recent earnings)
Earnings tell you what Netflix just reported, but cash flow tells you what the core engine is actually throwing off quarter after quarter, and that is what valuation focused investors usually care about most.
On Netflix’s cash flows alone, it is possible the current price paints a different picture of the business and that the stock could be a solid 22% undervalued.
Bulls argue Netflix can turn new products into a second wave of expansion that sits on top of the subscription base.
Q3 tells a mixed story. Ads grew more than 80% year on year and live sports deals like the NFL package and FIFA rights are in place, so the engines exist. Yet management cut 2026 ad expectations to about US$2.7b, and Q4 guidance sits below the Street. This shows these growth levers are not fully offsetting softer engagement or slower top line momentum yet.
Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there.…Read more by Sasha Jovanovic