Netflix (NFLX 0.04%) delivered a strong first quarter, but the market was not happy about it. There seemed to be a disconnect between the numbers the streaming service presented and how investors ultimately feel about the forward guidance.
NASDAQ: NFLX
Key Data Points
This led to the stock price plunging 10% on Friday, April 17. Long-term investors should see this sudden dip as a solid entry point into a company that's steadily expanding globally, rather than a warning sign of future weakness.
Investors who were upset with the lukewarm forward outlook are missing a bigger point. Netflix has a massive opportunity outside of the United States. The streamer has penetrated less than 45% of the total addressable market, leaving plenty of eyeballs to capture through subscriptions.
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Netflix's fundamentals are fully intact, and the Q1 2026 results are overwhelmingly positive. First-quarter revenue grew 16% year over year, and operating income was up 18%. Both of these results were slightly ahead of the company's guidance.
Netflix also saw a massive jump in free cash flow following the termination of the Warner Bros. Discovery deal, as Netflix was owed $2.8 billion if the deal didn't finalize successfully.
Netflix's stock has been relatively flat over the past 12 months. The company still trades at a slight premium with a forward P/E ratio of 34 and a PEG ratio of 2.25. Overall, Netflix is really well positioned to continue its organic growth worldwide.
