Netflix Inc. (NASDAQ:NFLX) has long been a leader in the global streaming market. Yet, over the past year, NFLX stock has underperformed, dropping roughly 20% while the S&P 500 ($SPX) gained more than 14%. Shares are now about 39% below their 52-week high of $134.12, reflecting a sharp correction following years of strong growth.

Despite recent pressures, Netflix stock shows signs of value and continued growth potential, driven by operational execution, subscriber expansion, and an emerging advertising business. Here are three reasons why investors may want to consider buying NFLX stock today.

1. Netflix Stock Has Entered Oversold Territory

Technical indicators suggest that Netflix stock may have already priced in much of the recent negative sentiment. The weekly Relative Strength Index (RSI) has fallen to 26.8, well below the oversold threshold of 30. For context, peer Walt Disney Co. (NYSE:DIS) currently holds an RSI of 48.2.

An RSI in oversold territory does not guarantee a rebound, but it often indicates that selling pressure is becoming exhausted. For long-term investors, this can signal an opportunity to buy NFLX stock at lower levels, potentially positioning for stabilization or renewed upward momentum in the months ahead.

Oversold conditions are particularly notable given Netflix’s track record of executing successfully through market volatility. The stock’s current RSI level suggests that downside momentum may be slowing, creating a potential entry point for investors with a medium- to long-term horizon.

2. Netflix Set to Deliver Strong Earnings in 2026

Netflix’s fundamentals remain solid, supporting both revenue and earnings growth. Management forecasts full-year 2026 revenue between $50.7 billion and $51.7 billion, implying 12% to 14% growth. Analysts also project earnings per share (EPS) growth exceeding 23% for the year.

Subscriber engagement continues to be robust, driven by popular original content and a diverse mix of licensed programming. High engagement levels are expected to fuel subscriber growth and retention, while pricing power allows Netflix to increase subscription fees without significantly impacting demand.

The advertising-supported tier is emerging as a new growth engine. Ad revenue surged to $1.5 billion in 2025, with management targeting approximately $3 billion in ad sales for 2026. This new revenue stream complements subscriber growth and positions Netflix to capitalize on digital advertising trends.

Importantly, Netflix is investing in content and product innovation while improving operating efficiency. Management targets operating margins of 31.5% in 2026, a 200-basis-point increase from prior levels. Content spending is projected to grow more slowly than revenue, supporting margin expansion and sustainable profit growth.

3. Netflix Stock’s Valuation Looks Reasonable

After the recent pullback, Netflix stock trades at roughly 26.3 times forward earnings. Considering the projected EPS growth of over 23% in 2026 and more than 21% in 2027, this valuation appears justified.

The market is beginning to reward the company for its advertising strategy, content library, and ability to raise subscription prices. These factors support continued earnings momentum, making NFLX stock more attractive relative to past valuations when growth concerns were higher.

Investors looking for a combination of streaming market leadership, growth in advertising revenue, and a reasonable entry point may find Netflix stock compelling. The pullback has created an opportunity to participate in potential upside while valuation concerns are less pressing than in prior years.

The Bottom Line on Netflix Stock

Analysts maintain a “Moderate Buy” consensus rating on NFLX stock. Yet, with the stock in oversold territory, strong earnings growth on the horizon, and a reasonable forward valuation, Netflix offers an appealing risk-reward profile.

Long-term investors who can tolerate short-term volatility may view the current market price as an opportunity to invest in a global streaming leader poised to benefit from subscription growth, ad revenue expansion, and operational efficiency. While uncertainties remain, the combination of oversold conditions, solid fundamentals, and fair valuation make NFLX stock a candidate for potential portfolio inclusion today.

 

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