Cathie Wood Just Bought the Dip in Netflix Stock. Should You?

Cathie Wood’s Ark Invest purchased Netflix (NFLX) shares for the first time after the stock dropped 10% following third-quarter earnings results. The Ark Next Generation Internet ETF (ARKW) acquired 15,756 NFLX shares worth $17.5 million, making Netflix the fund’s 40th-largest holding with a 0.77% allocation.

The streaming giant missed earnings estimates due to a one-time charge related to a Brazilian tax dispute. Wood’s move indicates confidence in Netflix’s long-term potential despite near-term volatility.

However, the relatively small position suggests it represents a strategic dip-buying opportunity rather than a high-conviction bet. Investors should note that Wood’s ARKW ETF has surged by more than 100% over the past year, giving the fund manager the flexibility to take calculated risks on fundamentally strong growth stocks.

Let’s see if Netflix stock is a good buy right now.

In the September quarter, Netflix achieved a record television viewing share in the United States and the United Kingdom. It indicates engagement growth even as competition in the streaming segment continues to heat up.

The streaming giant also posted its best advertising sales quarter ever and remains on track to more than double ad revenue for the full year. However, Netflix declined to disclose specific figures for the size of its advertising business, leading analysts to conclude that subscription fees will continue to drive the majority of revenue growth. Netflix raised prices across multiple tiers in January, including its ad-supported option, indicating pricing power.

The content slate heading into Q4 includes major franchises that should drive subscriber engagement. The fifth and final season of Stranger Things arrives alongside new seasons of The Diplomat and Nobody Wants This. Big-budget films from Guillermo del Toro and Rian Johnson round out the premium offerings. Management pointed to KPop Demon Hunters as evidence of its content-creation capabilities, noting that the animated film became Netflix’s most-watched movie ever, with over 325 million views.

Netflix announced partnerships with Hasbro (HAS) and Mattel (MAT) to produce consumer products tied to KPop Demon Hunters, marking a rare collaboration between the toy giants. These products will reach retail shelves in spring 2026 as Netflix explores adjacent revenue opportunities beyond streaming subscriptions. The company mentioned investigating licensing possibilities in live experiences, publishing, beauty, lifestyle, food, and beverages.

Netflix reaffirmed its full-year revenue guidance of $45.1 billion, representing 16% growth. However, it lowered operating margin forecasts from 30% to 29% due to the Brazilian tax issues.

Netflix controls just 7% of addressable consumer entertainment spending and 10% of television viewing time in its largest market, suggesting substantial room for continued growth despite near-term volatility from one-time accounting charges.

Analysts tracking NFLX stock forecast revenue to increase from $39 billion in 2024 to $68.4 billion in 2029. In this period, adjusted earnings per share are forecast to expand from $19.83 to $54. Today, NFLX stock is trading at 36.6 times forward earnings, just below its five-year average of 38 times. If the stock is priced at 30x forward earnings, it should trade around $1,620 in early 2029, indicating an upside potential of 45% from current levels.

Out of the 47 analysts covering NFLX stock, 30 recommend “Strong Buy,” three recommend “Moderate Buy,” 13 recommend “Hold,” and one recommends “Strong Sell.” The average NFLX stock price target is $1,332.05, above the current price of $1,102.34.

On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com