Netflix Has Fallen More Than 40% 7 Times in Its History. Here's What Happened Next Each Time.

Over the past seven times Netflix's share price has fallen more than 40%, the stock has recovered and delivered impressive returns. In 2004, Netflix's share price plummeted 71% after its IPO, but it then surged 725% over the next year. In 2011, shares dropped 56% from a record high, only to triple in value over the following year.

In 2018, Netflix's stock slipped 44% during a prolonged period of time, but it recovered 42% by Christmas Eve. In 2021, the stock fell 76% from the end of October to early May, but it then climbed 107% over the next 12 months. Investors should consider that Netflix currently appears to be a value stock with a forward price-to-earnings ratio of 25.8, which is historically cheap.

However, intense competition in the streaming industry is reducing the catalyst that drove past gains. Despite a current decline, Netflix has historically recovered and generated significant returns in the following year.