This year has been a volatile one for many stocks, including Netflix (NFLX 0.73%). However, the king of streaming is currently up 7% in 2025 (as of Dec. 18), still a positive gain, even though it trails the broader market. With the proposed acquisition of Warner Bros Discovery assets, investors have a lot to chew on these days.
Netflix has been a top stock in recent decades; shares have risen a jaw-dropping 679% and 25,310% in the past 10 and 20 years, respectively. This is what happens when a business completely disrupts an industry, creates a new category altogether, and dominates its market.
But the world's best streaming stock is trading 29% below its peak. Should you buy Netflix before 2026?
Image source: Netflix.
Netflix's fundamentals are in solid shape
Regardless of what the stock might indicate, Netflix has been performing at a high level. Key metrics are all heading in the right direction. This showcases strong fundamentals.
Revenue totaled $33.1 billion in the first nine months of 2025, up 15% year over year. Operating income increased 28% during that time. And free cash flow totaled $2.7 billion in the third quarter. Those profit figures demonstrate Netflix's cost advantage, which allows it to stand out versus competitors that don't have the same scale.
The top priority, which is to continue creating compelling content offerings for its membership base across the world, isn't changing in 2026. But you can always count on Netflix's elite management team to figure out ways to push the business forward with the goal of reaching more households and generating greater revenue. For instance, Netflix's ad tier is thriving, with the business "on track to more than double ad revenue this year," according to co-CEO Greg Peters.
The company recently announced plans to show exclusive videos of popular podcasts on its streaming platform as deals are in place with Barstool Sports, iHeartMedia, and Spotify. It released Party Games last month, hoping to further tap another sizable market.
This doesn't mention Netflix's foray into live sports. It already has the rights to WWE matches and NFL Christmas Day games. Next year, Netflix will start to show MLB games and events. And in 2027 and 2031, it will show the FIFA Women's World Cup.
NASDAQ: NFLX
Key Data Points
Is this a buy-the-dip opportunity?
There might be two key factors at play that have had a negative impact on Netflix shares in recent months. The first was the company's Q3 2025 financial update when the business reported diluted earnings per share of $5.87, missing Wall Street sell-side analyst estimates by a wide margin. This was due to an unforeseen expense to deal with a dispute with Brazilian tax authorities. The stock was immediately down 10% on the news.
On Dec. 5, Netflix announced its proposal to buy certain assets of Warner Bros Discovery at an enterprise value of $82.7 billion. Since then, shares have dropped further. The market is clearly expressing its views on the possible deal. I'd assume Netflix planning to take on $59 billion in debt (compared to long-term debt of $14.5 billion as of Sept. 30) isn't really instilling confidence among the investment community.
What's more, massive mergers and acquisitions typically have a poor track record. Buyers overpay, strategic goals are difficult to meet, and cost synergies don't always pan out. That's the risk Netflix faces right now.
Market sentiment is weaker these days. Netflix shares trade at a price-to-earnings ratio of 39.8, a multiple that's down 23% over the past 12 months. The stock still doesn't look like a bargain, though. Investors who want to own the best businesses in the world, and put less emphasis on valuation, might be the only ones inclined to buy Netflix shares before 2026. Cautious investors will remain patient.
