3 Reasons to Buy Netflix Stock in June

Netflix shares are down 27% over the past year, but the article argues the stock may be setting up for a rebound after the abandoned Warner Bros. Discovery bid delivered a $2.8 billion termination fee and removed M&A overhang. Management faces a near-term catalyst with the annual shareholder meeting on June 4 and second-quarter results due in mid-July, after Q1 revenue rose 14% FX-neutral versus 15% expected. The stock is now at a three-year low on a 2027 P/E of 22x, suggesting valuation support despite recent disappointment.

Analysis

The setup is less about a fundamental inflection than a sentiment reset: NFLX has already de-rated enough that the next incremental data point can matter more than the absolute magnitude of growth. After a year of multiple compression, the stock is now trading like a “good” consumer subscription compounder rather than a scarce category winner, which lowers the bar for positive reaction if churn stays controlled and ad-tier monetization keeps offsetting price hikes.

The Warner Bros. outcome is a hidden positive because it removes a low-ROI integration risk and preserves management’s optionality. More importantly, the termination fee creates a one-time earnings cushion that can mask weaker core momentum in the near term, so the real watch item is not headline EPS but whether engagement and net adds hold after the recent pricing action. If those metrics are merely stable, the market can re-rate the name quickly because expectations have been reset below the company’s historical execution standard.

The contrarian miss is that investors are still treating NFLX like a mature media company, when the balance sheet, cash generation, and operating leverage increasingly resemble a software-like platform with content spend as growth capex. That matters because any evidence that incremental margin is flowing through faster than consensus will force estimates higher into 2025-2027, and the stock is cheap only if growth is deemed durable. The main tail risk is not a bad quarter, but a subtle rise in churn after price hikes that would expose how much of the thesis is dependent on pricing power rather than organic user expansion.

Competitive spillover favors WBD only in the sense that it monetizes its strategic asset, but NFLX benefits more by avoiding a capital-intensive distraction and keeping focus on product, ads, and international expansion. If management uses the shareholder meeting to signal stronger capital returns, ad load improvement, or a willingness to accelerate share repurchases, that could catalyze a multi-quarter rerating because it would confirm the company no longer needs to chase transformative M&A to justify growth.

Key Decisions for Investors

• Add to NFLX on any post-shareholder-meeting weakness: favorable risk/reward into mid-July earnings if churn remains contained; target a 10-15% rerating from current levels on a merely decent print.
• Buy NFLX call spreads into the next earnings cycle (e.g., 3-6 month tenor) to express upside from estimate revisions while limiting downside if pricing power is questioned; best if implied vol remains elevated but not extreme.
• Pair trade: long NFLX / short WBD over the next 1-2 quarters. Thesis: NFLX regains multiple on operating leverage and cleaner strategic focus, while WBD’s windfall is lower quality and more integration-heavy.
• If you want a lower-beta expression, sell cash-secured puts on NFLX 5-10% below spot into the June/July event window; collects premium while waiting for the market to overreact to any non-disastrous guidance.
• Reduce exposure if July results show even modest churn acceleration after the price increase; that would invalidate the ‘pricing power with stable retention’ assumption and likely compress the multiple back toward mid-teens earnings.