Netflix Shares Fell 27% Despite 300M Subscribers and $2.8B Termination Fee
NFLX•Netflix shares have slid 27% over the past year despite growing its paying subscriber base to over 300 million. The company netted a $2.8 billion termination fee from ending its Warner Bros. Discovery deal and heads into mid-July Q2 results trading at 22x 2027 earnings, marking a three-year low valuation.
1. Share Performance and Subscriber Growth
Netflix stock has declined 27% over the past year even as it expanded its global paying subscriber count to over 300 million, driven by steady content investment and market saturation concerns. Investors have questioned growth prospects in mature markets despite continued user additions in emerging regions.
2. Warner Bros. Discovery Termination Fee
Netflix received a $2.8 billion termination fee when it dissolved its joint venture agreement with Warner Bros. Discovery, providing a significant one-time boost to cash flow. This payment offsets some short-term subscription revenue pressures and strengthens the company’s balance sheet.
3. Q2 Results and Price Hike Outlook
The company is set to report Q2 results in mid-July, with analysts focused on subscriber additions and average revenue per user following recent subscription price increases. Strong subscriber growth or higher ARPU could signal improved monetization ahead of expectations.
4. 22x 2027 Earnings Valuation
At roughly 22 times projected 2027 earnings, Netflix is trading near a three-year low valuation, prompting some investors to view the stock as undervalued. The June 4 shareholder meeting will serve as a platform for management to outline growth strategies and regain confidence.
