NFLX: 17% Weekly Surge Tests $100 Resistance

Netflix trades at a P/E ratio of 39.1x based on trailing twelve-month earnings of $2.53 per share. The [price-to-book ratio](/posts/2026-02-22/deep-dive-price-to-book-ratio-how-to-use-pb-to-find-undervalued-stocks) stands at 14.9x, while [enterprise value to EBITDA](/posts/2026-02-21/deep-dive-how-to-value-a-stock-pe-evebitda-dcf-and-the-metrics-that-actually-matter) sits at 51.2x — all firmly in premium territory. Yet these multiples have compressed meaningfully from Q2 2025 peaks, when the P/E reached 45.5x and EV/EBITDA hit 74.5x.

The stock trades at 32.9x trailing sales, reflecting the market's willingness to pay up for Netflix's dominant position in global streaming. At $99.02, shares sit 26% below the 52-week high of $134.12 and 32% above the 52-week low of $75.01. The 200-day moving average at $109.68 remains overhead resistance, suggesting this rally may need fundamental catalysts to sustain further upside.

Netflix delivered $12.05 billion in Q4 2025 revenue, marking a 4.7% sequential increase from Q3's $11.51 billion and a 14.3% jump from Q1's $10.54 billion. Full-year 2025 revenue reached approximately $45.18 billion, demonstrating steady quarterly acceleration throughout the year.

However, profitability tells a more nuanced story. Q4 operating income of $2.96 billion produced a 24.5% operating margin — the lowest of the year, down from the Q2 peak of 34.1%. Net income of $2.42 billion similarly declined from Q2's $3.13 billion, as rising content costs and increased marketing spend compressed margins.

Diluted EPS came in at $0.56 for Q4, down from $0.72 in Q2 — a pattern investors should watch. Content amortization of $4.85 billion in Q4 alone (up from $3.91 billion in Q1) reflects Netflix's aggressive content investment cycle, which pressures reported earnings even as the subscriber base grows.

Netflix's financial health remains solid, with a current ratio of 1.19x and $9.07 billion in cash ($2.14 per share). The [debt-to-equity ratio](/posts/2026-03-02/debt-to-equity-ratio-what-leverage-reveals) of 0.54x is manageable for a company generating consistent free cash flow, and interest coverage of 12.6x provides comfortable headroom for debt servicing.

[Free cash flow](/posts/2026-02-21/deep-dive-free-cash-flow-explained-why-it-matters-more-than-earnings) per share of $0.44 in Q4 was well below Q3's $0.63, reflecting the lumpy nature of content spending. Operating cash flow of $2.11 billion in Q4 was similarly below Q3's $2.82 billion. The full-year FCF picture is healthier, with Netflix generating over $9.5 billion in operating cash flow across 2025.

[Return on equity](/posts/2026-02-24/deep-dive-what-is-return-on-equity-roe-how-to-calculate-it-the-dupont-framework-and-what-it-reveals-about-management-effectiveness) stands at 9.1% on a quarterly basis (approximately 36% annualized), supported by Netflix's asset-light streaming model. The company's net debt to EBITDA of 0.69x — down from 1.4x in Q1 — shows meaningful deleveraging through the year as Netflix prioritized balance sheet strength.

Netflix's decision to abandon the Warner Bros. Discovery bid is strategically significant. Rather than pursuing expensive media consolidation, management is doubling down on what works: original content, live events, gaming expansion, and advertising revenue growth. Bank of America analysts view this as the right call, noting Netflix's organic growth trajectory eliminates the integration risk inherent in large media acquisitions.

The competitive landscape continues to favor Netflix. With 300+ million global subscribers, the company's scale advantage in content amortization is unmatched — it can spread production costs across a subscriber base that dwarfs Disney+, Max, and Peacock combined. Gross margins of 45.9% in Q4, while below Q2's 51.9% peak, remain industry-leading for a streaming-first business.

The advertising tier represents an underappreciated growth vector. Netflix's ad-supported plan has expanded rapidly, and the company's vast content library makes it an attractive platform for advertisers seeking premium, brand-safe inventory.

Consensus analyst estimates project Netflix's quarterly revenue reaching $18.3 billion by Q1 2030 and $20.1 billion by Q4 2030, implying annualized revenue approaching $77 billion — a 70% increase from 2025 levels. Estimated EPS of $1.32-$1.50 per quarter by 2030 suggests annual earnings power of approximately $5.5-$5.7 billion.

The next earnings report on April 16, 2026 will be the first catalyst to test this rally's sustainability. Investors will focus on subscriber growth trends, advertising revenue contribution, and operating margin trajectory following the WBD exit.

Key risks include content cost inflation, potential regulatory scrutiny of streaming market dominance, and macroeconomic headwinds that could slow subscriber growth in mature markets. The 39x P/E also leaves little room for execution missteps — any margin compression or subscriber deceleration could trigger a sharp pullback from current levels.