Netflix Stock Is Up 25% From Its 2026 Lows. More Gains for NFLX Could Be in Store.

Netflix (NFLX) stock has surged 25% from its July 2026 low of $65.08 per share, reaching a value that remains 36% below its peak of $126.71 in September 2025. The rally has left investors wondering if the gains will continue or if they should sell some of their positions. In this report, we will examine the factors behind Netflix's recovery and assess whether there is still potential for further gains.

One key factor driving the rebound is Netflix's improved valuation following the second-quarter 2026 earnings crash. This has made the stock more attractive, with legendary investor Bill Ackman adding to his stake in Netflix during Q2. In his letter, Ackman praised Netflix's position in the streaming wars, predicting revenue growth at double-digit rates and earnings growth of close to 20% annually.

Additionally, the possibility of Netflix hosting third-party streaming services attracted media attention and boosted sentiment. The company's partnership with French broadcaster TF1 marked the first of its kind, and Co-CEO Greg Peters emphasized that such partnerships are beneficial for Netflix's members, enhancing the variety of content offered.

The weakness in the AI trade has also contributed to Netflix's renewed appeal, as the stock has underperformed due to the sector's hype. Analyst sentiment towards Netflix is turning positive, with Wolfe Research raising its target price from $84 to $95 per share. Currently, the consensus rating for Netflix is Moderate Buy, with 31 analysts assigning a Strong Buy rating and four a Moderate Buy rating. The mean target price of $95.48 suggests a potential upside of 17% from the current level.

Despite the optimism, there are still concerns about Netflix's future. While the streaming wars might eventually slow, the company is expected to continue growing as more users shift from traditional TV to streaming. Netflix's ad business is also expanding, with management forecasting that ad revenue will double to around $3 billion this year.

Price hikes and growing ad revenue, along with member additions, should help Netflix achieve double-digit annualized top-line growth over the next few years, with occasional fluctuations. The company's margins should also expand as it maintains content spending growth below revenue growth. Moreover, operating leverage is expected to support margin expansion as the member count increases.

Netflix has significant untapped potential, particularly from initiatives like video gaming and live events, which management views as substantial growth opportunities. Given these factors, I remain bullish on Netflix stock and anticipate that it will continue its upward trajectory throughout the year, ending higher from these levels.