Netflix (NFLX) has gone missing in the market's summer rally.
Netflix stock has fallen 5.5% in July, a stark contrast to the continued surge of Big Tech companies like Meta (META), Amazon (AMZN), and Nvidia (NVDA), which surpassed the $4 trillion market cap earlier this week. The streaming giant's recent struggles are particularly striking given its performance over the past year, which saw it consistently surpass Wall Street expectations with substantial subscriber growth, impressive earnings, and expanding profit margins.
Evercore ISI analysts led by Mark Mahaney wrote in a note that Netflix is among the “least risky” large-cap internet names heading into earnings. They cited strong subscriber satisfaction trends and growing ad tier traction.
“NFLX has a very consistent recent track record of exceeding its revenue and operating income guidance,” Mahaney said. Shares of Netflix are up more than 90% over the past year.
Netflix is set to report second quarter earnings on July 17. JPMorgan analysts anticipate revenue of roughly $11 billion and operating income north of $3.7 billion, both solid double-digit growth from a year ago. The company's 2025 outlook boasts projected revenue approaching $45 billion, operating margins around 30%, and free cash flow as high as $9 billion.
Still, the recent sell-off reflects rising investor hesitation around valuation and future upside. JPMorgan, which downgraded Netflix to Neutral, reaffirmed that call this week, citing a less compelling risk/reward profile following the stock's sharp run-up. It maintained a $1,230 price target and warns that Netflix's near-term may already be priced in.
Evercore ISI echoed a similar tone, noting that Netflix now trades at around 41 times forward earnings, a level that leaves little room for error. Just three months ago, Evercore ISI described the space as being in a “Net Stock Bear Market,” with many large-cap internet names trading near trough valuations.
Now, that sentiment has reversed. Many of those same names have surged 40% or more since April, driving what Evercore ISI called a “Net Stock Bull Market.”
With stock prices soaring, investors appear to be rotating into names with cleaner setups, or taking some chips off the table in names like Netflix, where expectations are already high.
But the company's fundamentals remain strong. Netflix's ad-supported business reaches roughly $94 million monthly users globally, per Evercore ISI. Ad revenue is expected to double in 2025.
Content momentum is also building. The second half of 2025 includes the return of “Squid Game,” “Wednesday,” and “Stranger Things.” The company has been steadily raising prices and expanding globally, driving stronger-than-expected average per revenue in several markets.
