Netflix, Inc · NFLX · NASDAQ
My estimate (a forecast, not a fact)
USD 58.43 / share
Market price, 21 Sep 2026
USD 71.79
Difference
−18.6%
What Netflix is and how it makes money
Netflix sells streaming subscriptions. Over the last 12 months that was $48.4 billion of revenue and $14.4 billion of operating profit — a margin of 29.7%, the highest since inception. More than half the revenue comes from outside North America. And there's a new advertising business that management expects to reach about $3 billion this year.
The last 4 years have been remarkable. Margin went from 17.8% to 29.7%. Growth reaccelerated to nearly 16%. If you extrapolate that, Netflix is cheap.
I don't, for 2 reasons. Netflix already takes about a third of every dollar spent on streaming subscriptions worldwide, and my forecast still pushes that toward 45% — so I'm already assuming it out-grows its own market by 5 points a year for a decade. And I'm not willing to assume it earns more than its cost of capital forever.
| 2022 | 12 months to June 2026 | |
|---|---|---|
| Revenue growth | 6.5% | 15.9% |
| Operating margin | 17.8% | 29.7% |
| Return on invested capital | 32.0% | |
| My estimate | $58.43 | |
| Share price | $71.79 | |
| Price as a percentage of value | 123% |
Two valuations — DCF and subscriber-based
The first method is the ordinary one. Forecast the cash flows for 10 years, work out what the business is worth after that, and discount it all back at 8.84%. That amounts to an estimate of $58.43 a share.
The second ignores cash flow entirely and values Netflix as what it actually is — its base of subscribers. What's an existing subscriber worth, what does a new one cost, and what does the corporate overhead cost to run? I reconstructed about 311 million subscribers, because Netflix stopped reporting the number last year. That gives an estimate of $25.26 a share.
The whole gap between them is one assumption: whether Netflix gets cheaper to run as it grows. The cash-flow model says yes. The subscriber model says no.
| Method | Value per share |
|---|---|
| Cash-flow model, or DCF | $58.43 |
| Subscriber model | $25.26 |
| My estimate | $58.43 |
The drivers behind the number
Three assumptions produce the $58.43.
Revenue growth of 14% next year — management's own guidance — then 15% a year through year 5. A long-run operating margin of 30%, which is below the 33.4% Netflix is running at right now, because I think the current level is what you get just after you stop password sharing and raise prices, not a resting state.
And the big one: after year 10 I assume Netflix earns exactly its cost of capital and not a penny more. Today it earns 32% on its capital against a cost of 8.84%. I'm assuming that entire advantage disappears. If I let it keep even a 12% return, the value goes to about $70 — within a dollar of the market price. That single assumption is worth more than everything else in the model combined, and it's the one you can most easily push back on.
| Change one assumption | Value per share |
|---|---|
| My estimate | $58.43 |
| Return on capital after year 10: 8.89% → 12% | ~$70 |
| Long-run margin: 30% → 33% | ~$65 |
| Growth years 2–5: 15% → 10% | ~$48 |
The valuation
Put it together. Revenue grows from $48.4 billion to $147 billion by year 10. Margin settles at 30%. Tax rises from 16% to 25%. Discount at 8.84%. Two-thirds of the entire value is the terminal value, which is worth $167 billion today, on top of $89 billion for the present value of the 10-year cash flows. Take off debt, add back cash, take off the options, and divide by 4,163 million shares.
$58.43 a share on the cash-flow model, $25.26 on the subscriber model. The current market price is $71.79 a share.
| Cash-flow model | Subscriber model | |
|---|---|---|
| Value per share | $58.43 | $25.26 |
| Market price | $71.79 | $71.79 |
| Price as a percentage of value | 123% | 284% |
The full-length video, and the analysis below, go through every assumption and both valuation approaches in more detail.
| Files Subscribe to download |
|---|
| Valuation model The FCFF model behind the estimate — every input, every year, and the value it produces. XLSX · 15 KB |
| Sensitivity table Value per share across two assumptions — revenues in year 10 and target pre-tax operating margin. XLSX · 44 KB |
| Market sizes The total addressable market size estimates for single or multi-business companies — TAM size, CAGR, implied market share, sources, caveats, etc. XLSX · 51 KB |
| Subscriber model The subscriber-based valuation — the reconstructed subscriber count, the income statement split into acquisition, servicing and corporate costs, and the value per share it produces. XLSX · 31 KB |
Sensitivity
Estimated value per share in USD, across the two assumptions that move it most. Rows are revenue in year 10 ($bn); columns are target pre-tax operating margin (%). Shaded cells clear the USD 71.79 price at publication.
My own case is highlighted — USD 57. Every row here grows revenue at a single constant rate to its year-ten figure, so it does not land exactly on my USD 58.43 estimate.
| Revenue in year 10 ($bn) | Target pre-tax operating margin (%) | ||||||
|---|---|---|---|---|---|---|---|
| 10 | 15 | 20 | 25 | 30 | 40 | 50 | |
| 103 | 12 | 20 | 28 | 36 | 45 | 61 | 77 |
| 125.1 | 12 | 22 | 31 | 41 | 51 | 70 | 89 |
| 147.2 | 12 | 23 | 35 | 46 | 57 | 79 | 101 |
| 169.3 | 13 | 25 | 38 | 50 | 62 | 87 | 112 |
| 191.4 | 13 | 27 | 40 | 54 | 68 | 96 | 124 |
| 235.5 | 13 | 30 | 46 | 63 | 80 | 113 | 146 |
| 287 | 13 | 33 | 53 | 73 | 93 | 132 | 172 |
Disclosure
- Position
- As at 21 September 2026, I do not own shares in Netflix. This covers shares held by people closely associated with me. It is a snapshot: if it changes, it changes in a new valuation, never by editing this one. I hold no position, long or short, exceeding 0.5% of Netflix's issued share capital.
- Author
- Lucian Mesaroș, independent equity analyst, sole author of this publication, publishing in a personal capacity as an individual. I am not authorised or supervised by the ASF or by any other financial supervisory authority, I am not an investment firm, and I do not provide investment advice.
- Valuation date
- 21 September 2026. Production completed 29 September 2026. First published 29 September 2026.
- Market price used.
- USD 71.79 — NASDAQ close, 21 September 2026 on NASDAQ, 21 September 2026. The percentage difference on this page compares my estimate to that price on that date, and is not updated afterwards.
- What the number is
- USD 58.43/share is my estimate of intrinsic value, produced by a discounted cash flow (FCFF) model. It is a forecast and an opinion, not a fact, not a price target I undertake to defend, and not a prediction of where the share price will go. Aswath Damodaran's discounted cash flow. Revenue is forecast for 10 years and faded to the risk-free rate, the operating margin converges to a long-run target, reinvestment is set by a sales-to-capital ratio, and the cash flows are discounted at the cost of capital, with a terminal value in which the return on capital equals the cost of capital. R&D is not capitalised and content commitments are not treated as debt. As a cross-check, a subscriber-based valuation adds the value of existing and new subscribers and subtracts the present value of corporate costs. It gives $25.26 a share and does not set the estimate. The full framework is at Methodology.
- Key assumptions
- Revenue growth of 14% in year 1, then 15% a year through year 5, fading to the risk-free rate of 4.77% by year 10 · Operating margin of 31.5% in year 1, converging to a 30% target by year 5 · Sales to capital of 1.0 in years 1–5 and 1.2 in years 6–10 · Effective tax rate of 16% rising to the 25% marginal rate by year 10 · Cost of capital of 8.84%, drifting to 8.89% after year 10 · Return on capital after year 10 equal to the cost of capital, 8.89% · Subscriber cross-check: 310.8m reconstructed subscribers, 95% annual renewal, a 15-year maximum subscriber life, and corporate costs growing at 7.11% a year for 10 years and 2.5% thereafter
- How wrong this can be
- Valuations are sensitive to assumptions I chose — the sensitivity table above shows what the estimate becomes when the two that matter most turn out differently. A small change moves the estimate materially. I can be, and have been, wrong.
- Time horizon
- At least 1 year, and normally far longer. I have no view on what the share price does over the coming weeks or months, and nothing here is a short-term call. Separately, this document stands until I next value Netflix — see What I've Published.
- Updates
- I revalue a company when it publishes annual results, or when something material changes. There is no guaranteed schedule, and no undertaking to update this page.
- Conflicts of interest
- I have no agreement of any kind with Netflix or with anyone connected to it, I have not been paid by anyone to produce this valuation, no one asked me to write it except through the public request page, no draft was shown to the company, and I am not a market maker, liquidity provider or adviser to it.
- Previous valuations of Netflix
- None in the last 12 months.
- Sources
- Netflix, Inc., Form 10-K for the fiscal year ended 31 December 2025 · Netflix, Inc., Form 10-K for the fiscal year ended 31 December 2024 · Netflix, Inc., Form 10-Q for the quarter ended 30 June 2026 · Netflix, Q2 2026 shareholder letter · market-data.xlsx, the market-size estimates published with this valuation All figures are as reported by the company unless I say otherwise.
- Everything I have published in the last 12 months:
- What I've Published