NFLX Analysis: The Warner Bros. Gambit — Why Netflix's 42% Drawdown From Highs Creates a Rare Entry Point Into Streaming's Only Profitable Juggernaut
Netflix trades at $77.95 as of February 18, 2026 — a staggering 42% below its 52-week high of $134.12 and well below its 50-day moving average of $89.32. The stock that once seemed untouchable has been humbled by a confluence of factors: investor anxiety over a potential acquisition of Warner Bros. Discovery assets, broader market rotation out of megacap tech, and lingering AI disruption fears that have rattled the entire media sector. At a $330 billion market cap, Netflix is priced as if something has fundamentally broken. Nothing has. Netflix just posted full-year 2025 revenue of $45.2 billion with $10.98 billion in net income and $9.46 billion in free cash flow — all record figures. Operating margins expanded meaningfully throughout the year, the ad-supported tier continued scaling, and the company returned $9.1 billion to shareholders through buybacks. The business has never been stronger, yet the stock is trading at roughly 31x trailing earnings, its lowest valuation multiple in over two years. The central question for investors now is whether the Warner Bros. Discovery acquisition chatter — and the associated fear of Netflix overpaying for legacy media assets — justifies such a severe discount. Or whether this selloff, driven more by sentiment than substance, represents one of the most compelling entry points into the dominant streaming platform since the post-pandemic correction of 2022. The data overwhelmingly supports the latter thesis.