Most Investors Think Netflix (NFLX) Is Too Expensive. I Think They're Wrong.

Many investors have pegged Netflix (NASDAQ: NFLX) as "expensive" for years, due to it stock trading at a premium valuation in the late 2010's during the streaming growth boom. Even though it still has this reputation in 2026, Netflix is now profitable, generating consistent earnings for shareholders and returning cash through stock buybacks.

In fact, I would go against the grain and say Netflix shares are not expensive (as some people think, but cheap. Here's why.

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Durable growth from subscriptions, and now advertising

As the leading premium video streaming service globally, Netflix continues to grow revenue through market share gains and by raising monthly subscription fees. Last quarter, revenue grew 13.4% year-over-year to $12.6 billion, with total sales up nearly 500% over the last 10 years.

Another monetization layer that is just getting started is advertising. Around the globe, Netflix is taking the billions upon billions of hours customers spend on its service and beginning to insert ads to improve monetization. A customer can still pay to go ad-free, but this will generate much more in sales from the lower-priced subscription tiers.

Advertising revenue is on track to reach $3 billion in 2026, representing around 6% of its overall revenue guidance of $51 billion for the year. Long-term, it is possible that advertising becomes a much larger % of revenue, which will drive durable revenue growth in the years ahead.

Returning capital to shareholders, but still going for global expansion

Another reason investors were skeptical of Netflix stock was its lack of positive free cash flow . That has now changed, with free cash flow up to $11 billion in the last 12 months. Smartly, in my opinion, Netflix is using this free cash flow to begin returning capital to shareholders through share repurchases . Last quarter, it spent $4.7 billion on share buybacks and has reduced shares outstanding by 6% over the last five years, thereby accelerating earnings per share (EPS) growth.

At the same time, Netflix is not relaxing with its global ambitions. It is moving aggressively to acquire sports rights for its members, which will improve the value proposition of the Netflix bundle, giving it the leverage to raise subscription prices and sell more advertisements. For example, it is making a big push in American football, acquiring rights for Thanksgiving and Christmas games, along with an opener game in Australia.