Is Netflix (NFLX) a Buying Opportunity After Its Sharp Selloff?

SGA Global Growth Strategy, an investment management firm, noted Netflix (NASDAQ:NFLX) as a detractor from returns during the second quarter of 2026. Despite solid first-quarter results, Netflix's stock faced pressure, leading to a 34.66% drop over the past 52 weeks and a 13.05% one-month decline as of August 21, 2026. The company reported a 16% year-over-year revenue increase (14% excluding FX) and an 18% rise in operating income, driven by growth in APAC and Latin America.

However, Netflix's second-quarter revenue guidance fell short by 1%, and EBIT guidance was 5% below expectations due to amortization timing. Management maintained revenue growth expectations of 11% to 13% (excluding FX) and 20% profit growth, slightly disappointing investors who anticipated a boost from recent price hikes and the removal of the Warner Bros.

Discovery deal overhang. Netflix is expected to refocus on its core business, deploy excess free cash flow toward AI investments, and buybacks, including a new $25 billion authorization. The firm continues to favor durable compounders and anticipates 16% revenue growth and 20% earnings growth over three years. While Netflix benefits from a recurring subscription model, the firm believes other AI stocks offer greater upside potential and less downside risk.