Netflix Stock Keeps Dipping: Is It Finally Time to Buy?

For years, Netflix (NASDAQ: NFLX) banal has felt impenetrable. From their lows successful 2022, shares kept marching higher, showing nary signs of slowing. That is, until the past fewer months. Netflix banal is present successful a 40% drawdown, driven by fears implicit its projected acquisition of Warner Bros. Discovery, which could load the concern with debt.

Are investors overreacting to this imaginable deal? Let's look into the details of Netflix's concern close present and spot whether it is clip to bargain the dip connected this storied compounder.

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A astonishment announcement deed the amusement manufacture successful December past twelvemonth erstwhile Netflix announced it intended to get Warner Bros. from Warner Bros. Discovery, giving it intelligence spot (IP) from the likes of HBO and the storied namesake movie studio.

It has faced contention from Paramount Skydance to get Warner Bros., which has attempted a somewhat hostile takeover to effort to person Warner Bros. absorption to take it implicit Netflix. In January, Netflix sweetened the woody by changing it to an all-cash connection of $82.7 billion. To concern the deal, Netflix volition request to instrumentality connected monolithic debt, which has investors tense astir the transaction. Plus, HBO and Warner Bros. are overmuch slower-growing businesses than Netflix and volition request to beryllium integrated into the halfway Netflix exertion to thrust worth creation.

This is an costly woody astatine a clip erstwhile Netflix is facing accrued contention from an improbable root successful the United States: YouTube. YouTube is present the astir fashionable exertion for TV viewing successful the United States, increasing its stock importantly implicit the past 5 years. Netflix viewing hours are inactive growing, but not astir arsenic accelerated arsenic the planetary video creator platform.

Despite these fears, Netflix's halfway concern is doing conscionable fine. Revenue grew 16% successful 2025 and is expected to turn astatine 12% to 14% successful 2026. Earnings and escaped currency travel are strong, with operating net present astatine $13.4 cardinal and escaped currency travel astatine $9.5 billion. This increasing currency travel -- on with the acquired net from Warner Bros. -- volition assistance Netflix deleverage its equilibrium expanse aft making the acquisition (if it is closed).

In each likelihood, this projected acquisition conscionable gave Wall Street an excuse to merchantability Netflix astatine its premium valuation. Netflix traded astatine a price-to-earnings ratio (P/E) of 60 earlier successful 2025. It present has a P/E ratio of 31. This is simply a overmuch much palatable net ratio, and could marque Netflix banal a bargain contiguous contempt the risks associated with acquiring Warner Bros.