I've been on the sidelines sat mostly in cash. I anticipated this drop in the market, I warned you all about oil prices and the euphoria in semis. Now i'm looking to deploy cash, I have turned my attention to core compounding machines that have been forgotten about.
Netflix has dropped over 50% from its highs and is now trading around fair value. Does it offer a margin of safety at this level? I calculate the fair value around $66, so I have taken a nibble here but I want to fill my position lower - ideally at $50.
A few points to note:
- GAAP P/E is around 20.75x.
- The mature engine (North America) is reaching its ceiling. YoY growth decelerated from 18% in Q4 2025, to a flat 10% in Q2 2026. There is also growth decay in across other regions.
- The $8.99 ad supported tier accounted for over 60% of all Q1 sign ups, their advertising revenue is now at $3 billion for full year 2026.
- Slowdown in
- Management deployed a record $4.7bn share buyback in Q2 alone.
- We appear to be in wave C of the ABC pattern.
- We could close the gap down to $50, this would offer a solid 25% MOS.
I plan to build this position slowly, getting more aggressive as we close the gap. There's no hurry, I don't fomo into positions. It'll take management time to turn this ship around, I will be around to buy shares from the weak hands as the drop continues.
Not financial advice, do what's best for you.
Netflix has dropped over 50% from its highs and is now trading around fair value. Does it offer a margin of safety at this level? I calculate the fair value around $66, so I have taken a nibble here but I want to fill my position lower - ideally at $50.
A few points to note:
- GAAP P/E is around 20.75x.
- The mature engine (North America) is reaching its ceiling. YoY growth decelerated from 18% in Q4 2025, to a flat 10% in Q2 2026. There is also growth decay in across other regions.
- The $8.99 ad supported tier accounted for over 60% of all Q1 sign ups, their advertising revenue is now at $3 billion for full year 2026.
- Slowdown in
- Management deployed a record $4.7bn share buyback in Q2 alone.
- We appear to be in wave C of the ABC pattern.
- We could close the gap down to $50, this would offer a solid 25% MOS.
I plan to build this position slowly, getting more aggressive as we close the gap. There's no hurry, I don't fomo into positions. It'll take management time to turn this ship around, I will be around to buy shares from the weak hands as the drop continues.
Not financial advice, do what's best for you.
Trade active
As I said, I will buy at $66. The stock is up more than 10%. I will try my best to keep you guys updated on this. 
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.