Netflix Is Down, But One Billionaire Thinks the Stock Is a Buy
Bill Ackman re-entered NFLX despite a prior $400M loss, and the 12-month price target of $177 implies 128% upside.
Netflix at 29x earnings looks cheap compared to Spotify's 48x on nearly identical revenue growth, with ROE far exceeding Disney's 12%.
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Netflix (NASDAQ:NFLX) has been the streaming sector's biggest disappointment in 2026, but our model, and billionaire Bill Ackman, sees a rebound coming. With shares trading at $77.77 after a brutal slide from triple digits, the risk/reward profile has improved materially.
Our 24/7 Wall St. price target for Netflix is $177.27 over the next 12 months, implying 127.94% upside from current levels. The model output flags a bullish signal with a confidence level of 90%.
Netflix is down 17.05% year to date and 37.54% over the trailing year, with shares sitting 26% below the 52-week high of $126.71. The stock has begun to stabilize, with NFLX up 12.79% over the past month.
Bill Ackman is re-energizing bulls. Pershing Square disclosed a new Netflix stake that represents roughly 4.9% of Pershing Square USA's portfolio, a striking move given Ackman's prior Netflix trade cost him $400 million in 2022.
Fundamentals support the rebound. Q2 2026 revenue rose 13.4% to $12.56 billion, EPS of $0.80 beat consensus, and operating margin expanded to 33.4%. Netflix repurchased $4.7 billion in stock, its biggest quarter ever, with $27.1 billion still authorized.
Our bull scenario gets Netflix to $190.54, a 145% total return. The engine is advertising. Netflix guides ad revenue to roughly double to $3 billion in 2026, with advertiser count up 70% year over year to over 4,000 clients.
Add live sports (expanded NFL slate), a rapidly scaling games business (Netflix Playground kids app up 3x since April), and management's framing that Netflix serves only about 7% of $670 billion in addressable revenue, and the runway is enormous. Full-year 2026 guidance calls for $51 to $51.4 billion in revenue and $12.5 billion in free cash flow.
Our bear case lands at $141.66, an 82.15% return. Revenue growth has decelerated from 17.6% in Q4 2025 to 13.4% in Q2 2026. Free cash flow fell 32.7% year over year in Q2. Insider activity has been net selling, with both co-CEOs disposing of shares in early August.
The FCF drop reflects higher cash taxes and Warner Bros. termination payments, while executive sales are largely routine RSU vesting.
Spotify (NYSE:SPOT) is the purer streaming growth comp. SPOT trades at 48x earnings on 13.9% Q2 revenue growth, nearly identical to Netflix's top-line pace. Spotify's premium multiple against similar growth suggests Netflix at 29x is the cheaper way to own scaled global streaming, making our 24/7 Wall St. price target look conservative.
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