$Netflix(NFLX.US)

Netflix: Fundamentally Strong, Technically Mispriced?

Netflix’s post-Q2 weakness looks increasingly interesting for option writers. Q2 revenue rose 13% YoY to US$12.6bn, while operating margin remained a robust 33.4%. FY26 guidance calls for US$51.0–51.4bn revenue, 31.5% operating margin and ~US$12.5bn FCF, while advertising revenue is expected to roughly double. (Q4 Capital⁠)

Joel Phua’s thesis is compelling: Netflix’s selective live strategy can drive engagement, advertising and subscriber acquisition without the margin-destroying sports-rights commitments seen elsewhere. (FSMOne⁠)

Valuation: At roughly US$74, the stock trades at a materially lower earnings multiple than its historical range, while FY26 earnings and FCF continue to grow. The market appears to be pricing in structurally slower growth.

Technicals: The ~US$71–74 area is an important support zone after the post-earnings selloff. A sustained break below US$70 would weaken the bullish setup; reclaiming US$80–85 would improve momentum.

Option-writer view: Rather than chase the rebound, cash-secured puts around US$65–70 offer an attractive entry strategy: collect premium while being prepared to own a fundamentally stronger Netflix at a valuation that provides a wider margin of safety.

Not financial advice.