Shares of Netflix (NFLX 1.04%) have been riding a roller coaster in 2019. After several drastic drops and equally startling surges, the streaming video veteran trades 19% above its 52-week lows and 36% below annual highs. Zooming out a little bit, you'll find the stock trading 26% below the all-time highs that were set in the summer of 2018.

Netflix's skyrocketing shares are taking a break at the moment, trading closer to yearly lows than to all-time highs. It's a sharp slowdown compared to the 3,580% gains that sprung from owning Netflix over the last decade.

Does that make Netflix a buy at attractive prices or is there something fundamentally wrong with this picture? Let's find out.

Red Netflix logo on a beige stucco wall.

Image source: Netflix.

Why some investors stay away from Netflix

Netflix's recent struggles started with a disappointing report for the second quarter of 2018, where the company added fewer domestic subscribers than expected. That turned out to be a thematic element in the long slide that followed, punctuated by bouts of soft subscriber additions and concerns about intensifying competition.

Those are the issues that weigh on Netflix's stock to this day. If you expect the company's formerly rampant subscriber growth to stay stunted from this point, you'd obviously worry about the valuation since Netflix trades at 99 times trailing earnings and 20 times book value.

The competition issue feeds directly into the subscriber growth trend. New and/or improved video streaming services from Walt Disney, Apple, and AT&T's HBO -- just to name a few -- are seen as serious threats to Netflix's customer growth. These services will have to steal market share from Netflix in order to become successful themselves, right?

There are enough investors, analysts, and pundits in this camp to hold back the stock from its usual high-flying gains.

Signs of life

Netflix CEO Reed Hastings argues that the soft subscriber gains aren't related to heavy competition at all. In his analysis, they're more likely a reaction to the price increases that took effect last year. The company may be bumping up against a price level where consumers have to really think about whether or not they want Netflix services at the current price.

"The gap is almost entirely in the U.S., and that's really on the back of the price increase," Hastings said in last month's third-quarter earnings call. "There's a little more sensitivity, we're starting to see a little touch on that, and what we have to do is just really focus on the service quality, make us a must-have."

As for the rise of new rivals, Hastings shrugged that off as a sign of a healthy market.

It is interesting that we see both Apple and Disney launching basically in the same week after 12 years of not being in the market. But fundamentally, it's more of the same and Disney is going to be a great competitor. Apple is just beginning, but they'll probably have some great shows, too. But again, all of us are competing with linear TV and we're all relatively small to linear TV.

In other words, the entire collection of online streaming services will probably steal market share from cable and satellite TV for the foreseeable future. There's a big market opportunity on the table here, easily enough to feed several successful services at once -- with plenty of overlap, as many consumers will subscribe to several streaming services and still pay less than what their old cable package used to cost.

From this perspective, there's nothing worse going on here than a quick adjustment to higher service prices and perhaps a short-lived burst of enthusiasm for all the new streaming platforms. Netflix should be back to its old hypergrowth habits in short order, possibly as soon as January's fourth-quarter report.

So what's the final verdict, then?

Here are two theories: You can bet on Netflix fading in a sea of similar services over the next few years, missing its subscriber targets more often than it hits them, thus justifying the deep-discount share prices we see today. The future's so dark, I gotta wear a head lamp.

Or you can accept that the market for filmed entertainment is changing and that Netflix is leading the charge into cyberspace. Streaming services are killing TV networks and maybe even movie theaters. Even a shrinking share of this rapidly growing market should work out to fantastic results in the long run.

I'm a firm believer in the second theory. Netflix has been driving hard toward this long-term goal for more than a decade, and the efforts are starting to pay off. That January report will be mighty interesting, and that's only the first act of a longer drama. Netflix is growing up into a global entertainment giant before our very eyes, and the stock is on fire sale right now.

Yes, Netflix is a buy in the fall of 2019. If you had listened when I said the same thing in the wake of Netflix's Qwikster disaster, your investment would have grown tenfold over the next half-decade. So I guess you can come back and thank me for this one in five years or so.