4 weeks ago
6
Adam Levy, The Motley Fool
Fri, July 31, 2026 astatine 8:50 AM CDT 3 min read
Netflix (NASDAQ: NFLX) has seen its banal driblet astir 46% since peaking past summer, arsenic net maturation has slowed and absorption has moved to disclose little accusation astir spectator engagement. But successful my opinion, the sell-off has gone excessively far, and investors are ignoring the monolithic escaped currency travel generating capabilities of the premier streaming business.
Netflix is connected way to nutrient $12.5 cardinal successful escaped currency travel this year, and that fig could ascent importantly higher successful the years to come. That makes the banal a compelling bargain astatine its existent price.
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From maturation motor to escaped currency travel instrumentality
Netflix spent years pouring currency into acquiring and processing contented for its streaming service. It's built a immense room of archetypal contented implicit its decade-plus of producing it, and it present spends astir $19 cardinal per twelvemonth connected content.
That contented fund isn't needfully the largest among media companies, but absorption is highly effectual with its contented accumulation and acquisition decisions. With a planetary subscriber base, Netflix tin connection a wide scope of contented to everyone. And erstwhile it sees traction with definite content, it's speedy to treble down and beforehand it worldwide. It sports a increasing contented fund for unrecorded events, which don't relationship for important ticker time, but thrust sign-ups. As a result, currency contented walk per idiosyncratic is comparatively stable.
Meanwhile, Netflix is inactive signing up much users. It present has 325 cardinal planetary subscribers. What's more, it's expanding its gross per rank done a operation of terms hikes and advertising. Advertising inactive has a batch of country to grow, bringing successful astir $3 cardinal this year, up from $1.5 cardinal successful 2025. That fig should proceed to ascent arsenic Netflix increases engagement among its lower-tier subscribers and continues to adhd caller unrecorded events.
That should nutrient dependable leverage successful the business. Management likes to people a acceptable operating borderline astatine the commencement of each year, utilizing gross projections to acceptable its contented budget. The strategy consistently delivers operating borderline expansion, which successful crook drives beardown escaped currency travel growth.
Management has precocious utilized its excess escaped currency travel to bargain backmost shares, which looks peculiarly appealing astatine the existent price. It repurchased $11.5 cardinal successful shares done the archetypal fractional of the twelvemonth and has authorization to bargain backmost an further $27 billion. A strategical acquisition could assistance bolster its gross maturation and supply further leverage agelong term, but buying backmost shares astatine an charismatic terms is besides worth accretive for shareholders.
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