Netflix at $80: Impressive Growth Meets Valuation Questions

Netflix delivered a remarkably strong 2025, with revenue jumping 16% year-over-year to reach $45 billion while the global subscriber base surpassed 325 million. This growth came on top of equally impressive 16% revenue expansion the previous year. What makes the performance even more compelling is that Netflix achieved this expansion while simultaneously pushing operating margins from 26.7% to 29.5%. The company’s advertising business, still in its early phases, contributed about 3% of total revenue—demonstrating meaningful diversification beyond its core subscription model.

Yet despite this operational excellence, Netflix shares have retreated roughly 40% from their summer highs and currently trade near the 80 mark. The disconnect between strong business fundamentals and stock performance raises an important question for investors: has the market overshot on the downside, or does the current valuation still embed excessive optimism?

Understanding Netflix’s True Valuation at the 80 Price Point

While Netflix’s trailing price-to-earnings ratio sits around 32—a figure that appears demanding on the surface—this metric doesn’t fully capture the company’s value proposition. A more instructive lens is the forward price-to-earnings multiple, which reflects analyst consensus on earnings over the next 12 months.

This forward approach matters significantly for Netflix. Management has guided for 12-14% revenue growth in 2026, paired with operating margin expansion to 31.5%. These aren’t conservative targets; Netflix provides what it calls its “actual internal forecast,” prioritizing accuracy over under-promising. When you layer in the company’s demonstrated ability to expand margins while growing revenue, the mathematical outcome is substantial earnings-per-share expansion despite more moderate top-line growth.

At current trading levels near 80, Netflix’s forward P/E multiple sits around 26—considerably more palatable for a company that grew revenue 16% last year while expanding operating leverage. This valuation multiple becomes increasingly reasonable when you consider that management expects operating margin expansion to accelerate in 2026. The company’s ability to convert revenue growth directly into earnings growth—driven by operating leverage—is the critical dynamic that forward multiples are designed to capture.

The Growth Narrative: Why the Numbers Matter

The streaming industry’s economics have shifted meaningfully in Netflix’s favor. As the company scaled, it moved past the investment-heavy phase and is now harvesting the benefits of its established global infrastructure. This transition shows up clearly in margin expansion: a 2.8 percentage-point improvement in operating margin from 2024 to 2025, with another 2 percentage-point expansion expected in 2026.

For investors fixated on whether 80 represents a floor or a ceiling, this margin trajectory is essential context. Netflix isn’t just growing revenue; it’s growing revenue while improving profitability at an accelerating rate. This combination is relatively rare among mega-cap growth companies and justifies at least a portion of the premium valuation Netflix commands.

The Competition Reality Check

However, Netflix’s path forward isn’t without obstacles. Competition in streaming has intensified considerably, and the company faces rivalry not just from traditional streaming competitors but from every form of digital entertainment—social media platforms, gaming services, and more.

YouTube has notably expanded its focus toward long-form content and live sports. Amazon has built an extensive catalog that spans both original series and licensed content. Apple has quietly assembled a competitive streaming offering that, while smaller in scale, carries the financial resources and distribution advantages of one of the world’s most valuable companies.

Netflix management itself emphasizes this dynamic, describing the environment as “intensely competitive” and noting that “TV consumption patterns are constantly evolving, and competitive lines are increasingly blurring.” The company’s position remains dominant, but the margin for error has narrowed.

The Investment Decision: Reasonable Growth, but at What Price?

Netflix at 80 presents a paradox: the company is executing well, growth remains robust, and margin expansion is real. Yet the stock’s current valuation doesn’t provide sufficient cushion for scenarios in which competitive pressures intensify or subscriber growth plateaus more sharply than anticipated.

The forward P/E multiple of 26 is more reasonable than the trailing multiple suggests, but it still requires that Netflix deliver on its growth and margin expansion targets while fending off competitive pressures. For investors with high risk tolerance and conviction in Netflix’s long-term competitive position, the current price may offer sufficient opportunity. For others, the risk-reward calculus still leans toward waiting for better entry points.

The numbers are compelling, and Netflix’s operational momentum is undeniable. But valuation—even at 80—still reflects significant embedded optimism about the company’s ability to maintain leadership in an increasingly crowded streaming landscape.