Netflix Stock Will Be Worth More by 2028: My Case for Buying NFLX Now

Netflix shares are down 43% from their June 2025 all-time high despite management targeting a 31.5% operating margin in 2026, up 200bps year over year. The company repurchased a record $4.7B of stock in Q2, has $27.1B remaining buyback capacity, and expects its advertising business to generate about $3B this year. The article argues Netflix's roughly 21x forward P/E understates prospects for double-digit revenue growth and approximately 20% EPS growth, supported by margin expansion, advertising scale and repurchases.

Analysis

The relevant debate is not subscriber scale but durability of incremental monetization. NFLX can sustain earnings growth despite slower net adds if ad revenue, price/mix, and content efficiency offset each other; however, the market will likely require evidence that advertising becomes a material profit pool rather than merely a revenue bridge. The key near-term KPI is advertising revenue per ad-supported member/viewing hour, alongside whether engagement growth translates into lower churn after price increases.

Buybacks amplify per-share growth, but they are not a substitute for top-line reacceleration. At a roughly 21x forward P/E, the valuation is attractive only if management can defend a high-teens EPS trajectory; a de-rating risk emerges if content costs reaccelerate for live rights while ad monetization lags. The second-order beneficiary of NFLX’s live programming push is not NVDA, despite the article’s promotional reference, but potentially sports-rights owners and production vendors; conversely, WBD, PARA and DIS face greater rights-cost inflation without Netflix’s global subscriber base to amortize it.

Over the next 1-3 months, earnings commentary around ad sales, price elasticity and 2027 content commitments matters more than reported subscriber metrics. Over 6-18 months, the structural upside rests on NFLX proving it can build a premium connected-TV ad platform; the structural downside is that live-event acquisition becomes a margin-dilutive arms race against AMZN, DIS and YouTube. The bullish thesis is falsified by ad revenue missing management’s implied run-rate, operating-margin guidance failing to expand, or material churn following the next pricing action.

Key Decisions for Investors

• Initiate a measured long NFLX only ahead of the next earnings report if shares remain near or below ~21x forward EPS; target 15-20% upside over 6-12 months from earnings growth plus modest multiple normalization, with a 10-12% downside stop if margin guidance or advertising trajectory weakens.
• Prefer a pair trade long NFLX / short WBD over 6-12 months: Netflix has superior content-cost amortization and pricing power, while WBD has greater exposure to sports-rights inflation and balance-sheet constraints. Reassess if WBD demonstrates sustained direct-to-consumer profitability or NFLX commits to a large, uneconomic rights package.
• Use a post-earnings alert rather than pre-commitment for upside options: consider 6-9 month NFLX call spreads only if management quantifies advertising growth and maintains operating-margin expansion. Missing inputs are ad-tier scale, CPM trend and incremental content-rights commitments; without them, implied-volatility premium is not justified.
• Do not infer an AI-semiconductor read-through from this item. Maintain NVDA exposure based on independent data-center demand and valuation work; NFLX ad-targeting adoption is too small and indirect to alter NVDA earnings expectations.