Key Points
-
Netflix has lost out on deals recently.
-
The lost deals highlight the increasingly competitive nature of its business.
-
The company’s valuation in the recent past likely also played a role in its decline.
- 10 stocks we like better than Netflix ›
Netflix (NASDAQ: NFLX) executed a 10-for-1 stock split after the trading session on Nov. 14, 2025. The stock had steadily moved higher since mid-2022, rising from a split-adjusted $16.64 per share to a split-adjusted $133.91 per share almost one year ago, a few months before announcing the recent stock split.
Since the split, the communications stock is down 31%. Despite the disappointment, three factors likely explain the downturn.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Image source: The Motley Fool.
1. Lost deals
For one, Netflix has endured a rough patch in dealmaking. This began when a bidding war for Warner Bros. Discovery between Netflix and Paramount Skydance ended in Paramount’s favor.
Admittedly, given the $111 billion cost of the deal, this loss could turn out to be a win in the long run. Nonetheless, it also represents a missed opportunity for Netflix to acquire the content libraries of Warner Bros., HBO Max, and Discovery Channel, which would have significantly bolstered its market position.
Additionally, its losses did not end there. More recently, Fox outbid Netflix for control of Roku. Roku is a major platform for streaming Netflix, and with Netflix partially reviving itself through advertising, this loss could be a missed opportunity to play a more prominent role in that business.
2. Rising competition
Moreover, losing these deals hurts Netflix in the competitive race.
Initially, competition was much less of a concern when Netflix introduced its streaming service, pioneering an industry that ultimately supplanted video rental and prompted millions to drop cable TV.
Additionally, Netflix has a long history of staying ahead of the competition. It was among the first to develop unique content as competing streaming services entered the market. Also, Netflix is available in more than 190 countries, entering markets where many competitors do not operate. Under such conditions, one can see why Netflix boasts more than 325 million subscribers.
Nonetheless, such strategies only work for so long. Today, the number of available streaming services is in the thousands. Also, while ranking the best streaming services is objective, few can question that competition from heavyweights like Disney, Apple, Comcast, and others means Netflix has to continuously innovate and improve.
3. Valuation
Furthermore, despite the competitive pressures, Netflix stock experienced a bull move between mid-2022 and mid-2025, taking its valuation back to elevated levels that may have ultimately pressured the stock price.
In 2022, the price-to-earnings (P/E) ratio had fallen to a low of 15, arguably making Netflix a value stock. However, later that year, Netflix began running ads, which increased revenue. The move worked so well that by mid-2025, the earnings multiple had risen to a high of 63, with the stock price rising by approximately eightfold.
Such an earnings multiple was more understandable in Netflix’s early years when it was the streaming pioneer. Now that Netflix is merely one of many major streaming services, investors understandably have begun to question its premium.
Fortunately for Netflix bulls, valuation may have become less of a factor in recent weeks. Amid the pullback, Netflix stock now trades at about 25 times earnings, arguably making it an undervalued buy. Nonetheless, valuation could slow stock gains over time as more investors become aware of Netflix’s current role in its industry.
Assessing the Netflix pullback
The recent stock split appears to have prompted investors to reassess where Netflix currently stands in the marketplace, likely leading to the recent sell-off.
It is not yet clear whether losing the Paramount and Roku deals will hurt Netflix stock in the long run. Still, it is a reminder that Netflix could struggle to stay ahead of its competition over time. Given that issue, investors are understandably less willing to pay a premium for its stock.
Ultimately, Netflix should remain a force in the streaming industry, and the recent pullback in its valuation could make it a more attractive buy. However, it also reminds investors that Netflix has vulnerabilities, and they should probably think twice about paying a premium for this stock moving forward.
Should you buy stock in Netflix right now?
Before you buy stock in Netflix, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $417,305!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,293,148!*
Now, it’s worth noting Stock Advisor’s total average return is 936% — a market-crushing outperformance compared to 209% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of June 21, 2026.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Netflix, Roku, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
