Netflix, Inc. is a leading global entertainment service providing TV series, films, games, and live programming across diverse genres and languages. The company's core strategy focuses on global growth by continuously enhancing the member experience through compelling content and varied pricing plans, including ad-supported options.
Management reported solid year-over-year revenue growth, driven by both membership growth and higher ARM, with operating margin expanding versus the prior year quarter. They highlighted strong free cash flow generation and reaffirmed their capital allocation priorities: investing in content and product, maintaining a healthy balance sheet, and retu
Forward guidance
Management guided to continued healthy revenue growth driven by a combination of steady membership gains and increasing ARM (average revenue per membership), supported by further roll-out and maturation of the ads tier and paid sharing. They reiterated their long-term operating margin target in the low- to mid‑20s, signaling incremental margin expa
Notable Q&A
One notable Q&A segment focused on the trajectory of the ads business, where analysts pressed management on CPMs, fill rates and whether ad-supported engagement was cannibalizing premium tiers; executives responded that the ads tier was still in its early innings, with improving monetization and lar
Surprise items
A key surprise for investors was the strength and speed of traction in the ads tier and paid sharing initiatives, which contributed more meaningfully to revenue and profit growth than many expected. Management also underscored a more confident stance on margin expansion over the next several years,
Q4 2025 (Jan 22, 2026) · Confident
Fundamentals
Signal
52-week high / low
$127.75 / $70.86
Forward P/E
19.2×
Trailing 23.7×
Dividend
—
Analysts covering
44
Avg target $112.17
Beta
1.52
vs. S&P 500
Short interest
2.5%
Float shorted
Buy
74%
Hold
26%
Sell
0%
Wall Street consensus — sourced weekly via public disclosures
Analyst coverage data sourced from public filings. Xavier analyst thesis summary available after weekly Perplexity scan completes.
Financial summary — Gemini analysis
Signal
Revenue
$45,183,036 thousands of USD
16% YoY
Operating margin
29.5%
Net income
$10,981,201 thousands of USD
Free cash flow
$9,461,053 thousands of USD
Dividend / share
Total debt
$14,463 millions of USD
Cash: $9,067,872 thousands of USD
Earnings quality:MEDIUM
Recurring revenue:100%
Cash conversion:0.9x
Non-recurring items: Non-income tax assessments in Brazil ($619 million cumulative loss), Transaction-related costs associated with the WBD acquisition
Confidence 6.2 / 10 · 75% model agreement ·
Scheduled Jun 07, 2026
NFLX is trading near its 52-week low (~$82, low was $75) after a 30%+ drawdown from its high of $134, with persistent selling pressure confirmed by seven consecutive down sessions as recently as June 2. The stock carries a 26.5x TTM P/E and 21.4x forward P/E at a time when revenue growth is essentially flat (0.16%) on a sequential basis and the macro backdrop is neutral-to-bearish. Post-Q1 earnings sentiment was negative (shares fell 9% in extended trading), governance overhang from Reed Hastings' board exit and the failed WBD deal linger, and M&A-related costs are being pulled forward into 2026, pressuring near-term earnings quality.
Strongest bull case
Netflix raised its 2026 free cash flow guidance to $12.5 billion, reported 16.2% Q1 revenue growth year-over-year, reiterated $3 billion in advertising revenue for 2026 (doubling YoY), and trades at a ~28% discount to the consensus analyst price target of ~$114 — offering substantial mean-reversion upside if sentiment stabilizes.
Strongest bear case
The stock has been in a sustained technical downtrend (7 consecutive down sessions as of June 2), currently hovering only ~9% above its 52-week low of $75, with no insider buying in 90 days, a high beta of 1.49 into a neutral-to-bearish macro regime, and WBD deal termination costs being accelerated into 2026 that will suppress reported EPS. Any macro risk-off episode hits NFLX disproportionately given its beta.
What the market may be missing
The governance transition — Reed Hastings' board exit and Jay Hoag's appointment as new Chairman — may be underappreciated as a sentiment overhang. Hastings was a symbolic anchor for long-term institutional holders; his departure, combined with the abandoned WBD acquisition, signals strategic drift that could delay re-rating even if fundamentals (FCF, ad revenue) are improving. The market is treating this as a valuation story, but it may be a confidence/governance story in the near term.
Netflix co-CEO Ted Sarandos discussed the company's aggressive expansion into live sports amid pressure from the NFL, ongoing legal challenges, and broader global growth strategies. He highlighted Netflix's pivot towards live content to attract new a
The segment referenced Netflix CEO Ted Sarandos in the context of Prince Harry and Meghan Markle's strained celebrity relationships in America, noting 'burnt bridges' with high-profile figures. It touched on the implications for their Netflix deal an
CEO letter to shareholders
Signal
No shareholder letter on file for NFLX
Some companies file their annual report without a separate CEO letter.
When available, Xavier extracts strategic themes, tone analysis, and
forward-looking statements to help you read between the lines.
SENIOR UNSECURED DELAYED DRAW TERM LOAN CREDIT AGREEMENT
Matures 2030-09-13 · Filed 2025-12-22
Floating · SOFR | Prime | Fed Funds
Unsecured
Revolver$5,000,000,000
SENIOR UNSECURED REVOLVING CREDIT AGREEMENT dated as of December 19, 2025
Matures · Filed 2025-12-22
Floating · SOFR | Prime | Fed Funds
unsecured
Bridge$59.0 billion
364-Day Senior Unsecured Bridge Facility
Matures · Filed 2025-12-05
Floating · SOFR | Prime | Fed Funds
unsecured
Credit$1,000,000,000
Revolving Credit Agreement, dated as of July 27, 2017, as amended by the First Amendment Agreement,
Matures 2026-06-17 · Filed 2023-04-21
Floating · SOFR | Prime
Unsecured, but includes a negative pledge clause (Section 6.02(a)) requiring that if the Borrower or any Domestic Restricted Subsidiary creates a Lien on any Principal Property to secure Indebtedness, the Obligations must be equally and ratably secured. A 'Collateral Trigger Event' (Section 5.10(b)) would require the Borrower to grant a pari passu security interest in the property or assets subject to the applicable Initial Lien.
Financial covenants
Minimum Consolidated Interest Coverage Ratio
≥ 3.00:1.00
Consolidated EBITDA to Consolidated Interest Expense
SENIOR UNSECURED DELAYED DRAW TERM LOAN CREDIT AGR
Maximum Aggregate Lien Amount
≤ greater of (a) $7,000,000,000, and (b) 15.00% of Consolidated Total Assets
Aggregate Lien Amount
SENIOR UNSECURED DELAYED DRAW TERM LOAN CREDIT AGR
Minimum Consolidated EBITDA to Consolidated Interest Expense Ratio
≥ 3.00:1.00
Consolidated EBITDA to Consolidated Interest Expense
SENIOR UNSECURED REVOLVING CREDIT AGREEMENT dated
Maximum Aggregate Debt / Maximum Leverage Ratio
does not exceed an amount equal to the greater of (a) $6,000,000,000, and (b) 3.50 times Consolidated EBITDA of the Borrower for the Measurement Period immediately preceding the date of the creation or incurrence of the Subsidiary Debt/Lien.
Aggregate Debt / Consolidated EBITDA
Revolving Credit Agreement, dated as of July 27, 2
Cross-default risk
3 agreements contain cross-default provisions — a covenant breach on one facility may trigger default on others.
Xavier risk radar
Pro
Covenant headroom
Low leverage — no covenants required
Earnings quality
MEDIUM (cash conversion 0.9x)
Risk trend
Risk increasing — Failure to attract and retain members and successfully compete in the intensely
Mgmt narrative
Management tone: Bullish
Analyst drift
Consensus Buy — targets stable
Insider sentiment
Pattern detection — 90 days needed
Signal history
Signal
Date
Direction
Conf.
Agree.
Thesis
Price
Type
Jun 07, 2026
NEUTRAL
6.2/10
75%
NFLX is trading near its 52-week low (~$82, low was $75) after a 30%+ drawdown from its high of $134...
$82.18
Sched.
May 31, 2026
BULLISH
6.3/10
50%
NFLX is trading ~36% below its 52-week high and ~25% below the consensus analyst price target of ~$1...
$86.02
Sched.
May 24, 2026
NEUTRAL
6.2/10
67%
NFLX screens as fairly to slightly expensive for a 5-day tactical call: the stock is still below ana...
$88.60
Sched.
May 17, 2026
NEUTRAL
6.0/10
50%
NFLX is trading ~35% below its 52-week high and ~24% below the consensus analyst target of $114.55, ...
$87.02
Sched.
May 10, 2026
NEUTRAL
6.5/10
67%
NFLX has a supportive macro backdrop, positive earnings growth, and still trades well below consensu...
$87.49
Sched.
May 03, 2026
NEUTRAL
6.7/10
75%
NFLX is trading ~31% below its 52-week high after a post-earnings -9.7% selloff driven by Q2 guidanc...
$92.06
Sched.
Apr 24, 2026
NEUTRAL
6.3/10
75%
NFLX has already absorbed a ~13% post-earnings drop triggered by a disappointing Q2 guidance miss an...
$92.82
Event
Apr 17, 2026
BEARISH
7.5/10
100%
NFLX just experienced a post-earnings gap-down of ~10%, driven by a Q2 revenue guidance miss (Q2 gui...
$96.76
Event
Apr 17, 2026
BEARISH
7.5/10
75%
Netflix just reported a strong Q1 beat (EPS $1.23 vs $0.76 consensus, revenue $12.25B vs $12.17B exp...
$107.79
Event
Apr 12, 2026
BULLISH
6.8/10
75%
Netflix reports Q1 2026 earnings on April 16, just four trading days away, and the stock has recover...
$103.01
Sched.
Showing last 10 signals
NFLXNetflix Inc.
Signal
FY2026 annual report (10-K filed 2026-01-23)
INCOME STATEMENT
?Revenue
$45,183,036 thousands of USD16% YoY
Total sales from advertising, subscriptions, wireless service, streaming, and content. Up 16% from last year.
?Operating income
$13,326,603 thousands of USD
What remains after subtracting all operating costs — salaries, materials, rent, R&D — from revenue. This is the profit from actually running the business, before interest and taxes. Operating margin is 29.5%, meaning 30 cents of every dollar of revenue becomes operating profit.
?Net income
$10,981,201 thousands of USD
The bottom line — what the company actually earned after all expenses, interest, and taxes. This is the number that gets divided by shares outstanding to calculate earnings per share (EPS), which directly affects the stock price. Net margin is 43.1%. Note: results include non-recurring items (non-income tax assessments in brazil ($619 million cumulative loss), transaction-related costs associated with the wbd acquisition) that may not repeat.
?Free cash flow
$9,461,053 thousands of USD
Operating cash flow minus capital expenditure. This is the money available for dividends, share buybacks, debt repayment, or acquisitions. Free cash flow is what many professional investors consider the truest measure of financial health.
?EPS (diluted)
$1.23
Earnings per share — net income divided by total shares outstanding (including stock options and convertible bonds that could become shares). This is the single number most investors watch because it directly connects company profits to your ownership stake.
BALANCE SHEET
?Total assets
$61.0B
Everything the company owns — cash, factories, equipment, patents, inventory, investments. Includes wireless spectrum, content libraries, subscriber bases, and network infrastructure.
?Cash & equivalents
$9,067,872 thousands of USD
Money available right now — bank accounts, money market funds, short-term government bonds. This is the company's financial cushion. More cash means more flexibility to invest, acquire, or survive a downturn without borrowing.
?Total debt
$14,463 millions of USD
All money the company owes — bonds, bank loans, credit facilities. Compare this to cash to understand the net debt position. The company holds $9,067,872 thousands of USD in cash against this debt.
?Shares outstanding
4,222,162,150
Total number of shares that exist — owned by all investors, insiders, and institutions combined. When the company reports EPS, this is the denominator. Share buybacks reduce this number, which increases EPS even without earnings growth.
?Debt-to-equity ratio
0.5%
How much debt the company uses for every dollar of shareholder equity. Under 100% means more equity than debt (conservative). Over 200% means heavy leverage. Banks and utilities naturally run higher ratios.
CASH FLOW
?Operating cash flow
$5.3B
Actual cash generated from running the business — not accounting profits, real money coming in the door. This is more trustworthy than net income because it's harder to manipulate. A company can report profits but still run out of cash.
?Capital expenditure
$196M
Money spent on long-term assets — cell towers, fiber networks, content production, and data centers. This is the cost of maintaining and growing the business.
?Free cash flow
$5.1B
Operating cash flow minus capital expenditure. This is the money available for dividends, share buybacks, debt repayment, or acquisitions. Free cash flow is what many professional investors consider the truest measure of a company's financial health.
?Depreciation & amortization
$99M
A non-cash expense that spreads the cost of network infrastructure, content libraries, and wireless spectrum over their useful life. This reduces reported income but no cash actually leaves the company — that's why it gets added back to calculate EBITDA and operating cash flow.
EARNINGS QUALITY
?Accrual quality
MEDIUM
Measures how well reported earnings match actual cash generation. HIGH means earnings are backed by real cash. LOW means the company may be using accounting techniques to inflate reported numbers. Professional investors check this before trusting EPS.
?Recurring revenue
100%
100% of revenue comes from repeat sources — ongoing contracts, subscriptions, or regular customer purchasing patterns rather than one-time sales. Higher recurring revenue means more predictable future earnings.
?Cash conversion
0.9x
Operating cash flow divided by net income. Above 1.0x means the company generates more cash than it reports in profits — a sign of high-quality earnings. At 0.9x, the company is generating less cash than reported profits — investigate why.
?Non-recurring items
2 identified
One-time items that affect the bottom line but won't repeat: non-income tax assessments in brazil ($619 million cumulative loss), transaction-related costs associated with the wbd acquisition. When evaluating the company's true earning power, investors strip these out to see what the business earns on a normal basis.
?Management tone
Bullish
How management sounds in their SEC filings — are they confident, cautious, or defensive? This is analyzed from the actual language used in the 10-K annual report. A shift in tone from prior years can signal changing conditions before the numbers reflect it.
?Top risk factor
Increasing
Failure to attract and retain members and successfully compete in the intensely competitive entertainment market. Risk trend: increasing. This is the single biggest threat to the company's future earnings as identified in their SEC filing.
Click any row to expand the plain-English explanation. Source: SEC EDGAR XBRL filings.
Capital intelligence
Signal
Weighted Average Cost of Capital · Return on Invested Capital · Economic Value Added
ROIC
33.84%
WACC
12.23%
🟢 VALUE CREATOR — EVA Spread: 21.61%
?WACC
12.23%
Weighted Average Cost of Capital — the minimum return Netflix Inc. must earn on its investments to satisfy both debt holders and shareholders. Computed from a 95.57% equity / 4.43% debt capital structure. If the company earns less than 12.23% on its invested capital, it is destroying shareholder value.
?Cost of equity
12.59%
The return shareholders demand for holding NFLX stock instead of a risk-free Treasury bond. Computed using the Capital Asset Pricing Model: Risk-Free Rate (4.25%) + Beta (1.52) × Equity Risk Premium (5.50%). A beta of 1.52 means NFLX is more volatile than the overall market.
?Cost of debt (after-tax)
4.44%
What Netflix Inc. effectively pays on its borrowed money after the tax deduction on interest. Interest is tax-deductible, so the true cost is lower than the stated rate. Effective tax rate used: 19.31%.
?Capital structure
E: 95.57% / D: 4.43%
How Netflix Inc. finances its operations — the split between equity (stock market value: $309.6B) and debt (total borrowings: $14.4B). More debt means more leverage — higher potential returns but higher risk.
?ROIC
33.84%
Return on Invested Capital — how efficiently Netflix Inc. turns its total invested capital into after-tax operating profit. NOPAT ($11.2B) ÷ Invested Capital ($33.2B). This exceeds WACC, meaning the company creates value for shareholders.
?EVA
$7.2B
Economic Value Added — the dollar amount of value Netflix Inc. created (or destroyed) above its cost of capital. NOPAT ($11.2B) minus the capital charge (Invested Capital × WACC = $4.1B). Positive EVA means every dollar of capital is earning more than it costs.
?NOPAT
$11.2B
Net Operating Profit After Tax — operating income adjusted for taxes, ignoring how the company is financed. Operating Income ($13.9B) × (1 - Tax Rate 19.31%). This isolates the company's core business profitability from its financing decisions.
Xavier consensus signals are intelligence outputs, not investment advice. All signals are generated by a multi-model AI system and reflect public information at time of generation. Past signal accuracy does not guarantee future performance. Wall Street analyst consensus sourced from public disclosures, summarized weekly. Financial data sourced from SEC EDGAR and yfinance. Insider transactions sourced from SEC EDGAR Form 4 filings. Updated Jun 07, 2026.