Netflix (NFLX) stock has grown by nearly 100% in the last year, blasting investor forecasts out of the water. While that makes it one of the best-performing S&P 500 members over that span, it’s also boosted its valuation to 45 times expected earnings for the next year. Thus, there are growing concerns among Wall Street experts that the stock will eventually face a sell-off, sending shares plummeting.
Currently trading at $1,285, NFLX shares are at their highest levels since the COVID-19 pandemic. However, they have fallen 3% today amid the fears of an eventual selloff. The upcoming earnings report on July 17 will ultimately paint a picture of Netflix’s future, with concerns of subscriber falloff incoming. Analysts aren’t convinced and are already putting out analyses projecting a downturn.
“I feel really good about its fundamentals, in terms of its pricing power, ad business, and move into live events, but expectations have gotten to the point that any disappointment would be a risk,” said Michael Smith, senior portfolio manager and head of growth equity at Allspring Global Investments. Meanwhile, Bloomberg analysts forecast Netflix’s revenue to rise 14% in 2025, down from 16% growth in 2024. While that is still growth, it outpaces NFLX’s growing valuation, an uncommon and dangerous ratio.
Other Analysts Remain Bullish on Netflix (NFLX)
On the other hand, some investors remain unfazed by Netflix’s valuation. Ken Mahoney, chief executive officer of Mahoney Asset Management, acknowledges it’s a steep price to pay but believes Netflix’s market dominance justifies the premium. “People often miss great companies because they worry about valuation, and I don’t have a problem spending up for what Netflix offers,” Mahoney said. Netflix is “doing all the right things and is like a snowball getting bigger as it rolls downhill.” Compared to rivals like Disney and Paramount, Netflix remains the dominant front of streaming, and is expected to continue that with the addition of live sports events and popular original content.
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At press time, Netflix stock (NFLX) is trading near the top of its 52-week range and above its 200-day simple moving average. Analysts at CNN forecast the stock to trade at a median price of $1,200 over the next 12 months, and not going any higher than $1,600. Alternatively, upon a rough earnings report in two weeks, the stock could plunge lower, back towards $800.