Netflix (NFLX 9.71%) delivered a strong first quarter, but the market was not happy about it. There seemed to be a disconnect between the numbers the streaming service presented and how investors ultimately feel about the forward guidance.
Today’s Change
(-9.71%) $-10.47
Current Price
$97.32
Key Data Points
Market Cap
$411B
Day’s Range
$95.10 – $98.73
52wk Range
$75.01 – $134.12
Volume
5M
Avg Vol
50M
Gross Margin
49.44%
This led to the stock price plunging 10% on Friday, April 17. Long-term investors should see this sudden dip as a solid entry point into a company that’s steadily expanding globally, rather than a warning sign of future weakness.
Investors who were upset with the lukewarm forward outlook are missing a bigger point. Netflix has a massive opportunity outside of the United States. The streamer has penetrated less than 45% of the total addressable market, leaving plenty of eyeballs to capture through subscriptions.
Image source: Getty Images.
Netflix’s fundamentals are fully intact, and the Q1 2026 results are overwhelmingly positive. First-quarter revenue grew 16% year over year, and operating income was up 18%. Both of these results were slightly ahead of the company’s guidance.
Netflix also saw a massive jump in free cash flow following the termination of the Warner Bros. Discovery deal, as Netflix was owed $2.8 billion if the deal didn’t finalize successfully.
Netflix’s stock has been relatively flat over the past 12 months. The company still trades at a slight premium with a forward P/E ratio of 34 and a PEG ratio of 2.25. Overall, Netflix is really well positioned to continue its organic growth worldwide.
Catie Hogan has positions in Warner Bros. Discovery. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
