Netflix closed 2025 with a record 325 million paying subscribers, solidifying its lead over Amazon Prime (200 million) and Disney+ (131.6 million). Despite this achievement, the stock has fallen 36% from its mid-2025 high, driven by investor concerns over slowing growth in mature markets and strategic risks. This pullback marks one of the steepest in the company’s history and presents a rare opportunity to acquire shares at a substantial discount to recent peaks.

Since launching a $7.99 ad-supported tier in 2022, Netflix’s advertising revenue doubled year-over-year in 2024 and then surged again to $1.5 billion in 2025. Although this represents just 3% of the $45.2 billion in total revenue, management expects advertising revenue to double once more in 2026. With earnings per share projected to rise from $2.53 in 2025 to $3.12 next year, the stock trades at a forward P/E of 26.6—nearly 20% below its 2025 multiple—implying potential upside of roughly 24% if consensus forecasts are met.

In December, Netflix proposed an $82 billion acquisition of Warner Bros. Discovery’s content assets, including franchises such as Harry Potter, Game of Thrones and the DC universe. The deal would instantly expand Netflix’s library and bolster advertising inventory, but it faces significant regulatory scrutiny given Warner’s position as the fourth-largest streaming provider. Approval is uncertain and could be delayed or blocked, adding execution risk to an otherwise transformative transaction.