Netflix shares lost 43%.Netflix profits rose 37%.
The verdict
14/ 20Moderate conviction
The business got stronger. The share price got cheaper. Netflix is a great business at a fair price, but not yet at a bargain price.
1. Durable moat (Green)
4 of 5: no rival matches its size or its local shows in 190+ countries
4 of 5: no rival matches its size or its local shows in 190+ countries
2. Return on capital (Green)
37 cents per $1 (ROIC 37%), up three years in a row
37 cents per $1 (ROIC 37%), up three years in a row
3. Growth runway (Green)
Sales up 12.6% a year since 2020
Sales up 12.6% a year since 2020
4. Cash conversion (Amber)
86 cents of cash for every $1 of profit
86 cents of cash for every $1 of profit
5. Balance sheet (Green)
Net debt equal to about 5 months of EBITDA (0.4x)
Net debt equal to about 5 months of EBITDA (0.4x)
6. AI resilience (Amber)
3 of 5: AI cuts its costs, but its rivals' costs too
3 of 5: AI cuts its costs, but its rivals' costs too
7. Insider alignment (Red)
$402M sold and $0 bought in 12 months
$402M sold and $0 bought in 12 months
8. Margin of safety (Amber)
Only about 3% below our $68 estimate
Only about 3% below our $68 estimate
9. Yield vs safe bonds (Amber)
3.5% cash yield vs 5.13% from US Treasuries
3.5% cash yield vs 5.13% from US Treasuries
10. Crowd sentiment (Green)
Discouragement: analysts are cutting their targets
Discouragement: analysts are cutting their targets
InvestingGym scorecard. Data: SEC EDGAR (10-K, Q3 2026 letter, Form 4), Yahoo Finance (price, 23 Oct 2026), Alpha Vantage (10-year US Treasury 5.13%, 21 Oct 2026).
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