Netflix Stock Slides After Earnings, but Analysts Urge Investors to Buy the Dip

Netflix shares slipped roughly 7% in early trading following its third-quarter earnings report, but many Wall Street analysts argue the long-term outlook remains robust, encouraging investors to buy the dip.

On Tuesday, the streaming giant reported third-quarter earnings of 87 cents per share, beating the LSEG consensus estimate of 82 cents per share. Revenue for the period reached $12.87 billion, aligning with Street expectations. However, Netflix lowered its full-year revenue outlook to $51.1 billion—representing a 13% year-over-year increase—and trimmed its advertising revenue forecast, prompting a sell-off in the stock.

Despite the downward revisions, several prominent analysts advised investors to look past the short-term headwinds. Jessica Reif Ehrlich of Bank of America maintained a “buy” rating on Netflix with a $90 price target, implying a 31% upside over the next 12 months. She noted that at under 20 times earnings per share, the valuation is undemanding for a company with over 300 million paying subscribers globally.

“The stock’s strong balance sheet, with roughly 1x gross leverage, is driving significant share buybacks—amounting to approximately $4.8 billion in the third quarter—and leaves ample room for future mergers and acquisitions,” Reif Ehrlich added.

Kannan Venkateshwar of Barclays acknowledged that the market’s reaction was “overly punitive” but “directionally fair” given the guidance cut. He highlighted that absolute growth remains healthy, though the valuation debate will likely focus on growth second derivatives. While scaling the advertising business remains a challenge, pricing and membership trends are holding up well, Venkateshwar noted, pointing to potential tailwinds from increased sports inventory and streaming bundles.

Other Wall Street firms, including JPMorgan, Morgan Stanley, BMO, Goldman Sachs, and Jefferies, maintained overweight or buy ratings on Netflix. JPMorgan highlighted accelerating trends in the U.S. and Canada, along with improving churn rates, as evidence of healthy multi-year growth headroom. Morgan Stanley noted that while advertising is tracking roughly $300 million light for the year, recent workforce reductions and leadership changes in content demonstrate decisive action.

Goldman Sachs emphasized that the combination of solid topline growth, share buybacks, and a rising ad-supported revenue stream makes the risk-reward profile highly attractive over a 12-month horizon. Meanwhile, Jefferies and BMO pointed to healthy membership and pricing trends, framing the near-term advertising slowdown as temporary buildout pain rather than a structural growth challenge.

As Netflix navigates a competitive landscape and shifts in its content strategy, analysts broadly agree that the current share price presents an attractive entry point for long-term investors.

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