Key Points
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Netflix stock fell as revenue growth slowed and its U.S. business lagged.
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Lower churn, successful price increases, and double-digit growth in every region show demand is still healthy.
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At about 17 times earnings, steady earnings growth could double the stock in five years.
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Netflix (NASDAQ: NFLX) stock hit a new 52-week low on Oct. 27, 2026, down 33% year to date. That’s a steep fall for a leading entertainment brand that still grows revenue by double digits.
Still, a stock trading at a discount to the market while growing revenue by double digits is worth a closer look. Here’s why Netflix is in a better competitive position than the stock’s performance suggests, and why the sell-off could set up a double over the next five years.
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Slowing U.S. growth explains the sell-off
Revenue growth has slowed for three straight quarters, from 18% in the fourth quarter of 2025 to 12% in Q3 2026. The laggard is the U.S. market. During the third-quarter earnings call, Co-CEO Greg Peters said, “We know that we can do better, and that better is our upside.”
Peters said management is focused on improving its U.S. content slate, which is expected to deliver better results. The streaming market is competitive, with YouTube continuing to dominate viewing time, according to Nielsen. Netflix is behind YouTube in the No. 2 spot, but that also means it’s ahead of dozens of other streaming services, including Walt Disney, Roku, and Amazon Prime.
Netflix subscribers are staying, and every region is growing
Every region grew revenue by double digits year over year last quarter: 11% in the U.S. and Canada; 11% in Europe, the Middle East, and Africa; 17% in Latin America; and 12% in Asia-Pacific. In India, a strong slate of local hits lifted viewing hours 24% year over year.
Importantly, slowing U.S. growth doesn’t mean subscribers are canceling. Peters said, “Q3 churn, both globally and in the United States, improved year on year,” meaning fewer members canceled. And this is following recent price increases, including in the U.S. When people keep paying more without leaving, the service is delivering value.
Netflix continues to grow and earn a healthy margin on revenue. It reported nearly $16 billion in trailing-12-month operating income on $50 billion of revenue, providing ample resources to fund a growing content budget and win more viewing time in the U.S. market.
Enough earnings growth to double the stock
Management reiterated its long-term financial goals to sustain double-digit revenue growth, increase profit margins, and grow free cash flow. If it delivers, earnings should grow faster than revenue, setting up a rebound in the stock.
The stock trades at about 17 times 2026 earnings estimates, as of Oct. 27, 2026 — a slight discount to the S&P 500 average forward price-to-earnings multiple of 19. Analysts expect earnings to grow about 21% annually in the next several years. That growth can double earnings, and the stock, in the next five years, assuming it continues to trade at the same earnings multiple.
There’s always been competition in entertainment, so I would look at execution on the content slate as the main risk. If Netflix can’t land more hit shows at home, revenue growth could continue to slow, and the stock might continue to underperform. I wouldn’t buy the stock expecting a quick rebound, but at this valuation, Netflix appears undervalued and set up to deliver excellent returns for patient investors.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Netflix. The Motley Fool has a disclosure policy.
