$NFLX just posted $12.9B in Q3 revenue — a record, but also the slowest growth in a year at +12% YoY. Net income jumped 44% to $3.7B, and operating margins hit an all-time high of 34.6%.
So the business is printing money and getting more efficient. Yet the stock was down 45% heading into this report.
This is a textbook example of why price and business performance don't always move together in the short run. Markets price in expectations, not just results. When a stock gets crushed for a year, it's often because investors already expected problems or priced in peak growth.
Now the question: is this a turnaround setup or a value trap? The fundamentals look solid. Margins are expanding. But revenue growth is slowing. If you believe streaming has more room to run and Netflix can keep squeezing profits, this could be interesting. If you think competition and saturation are the real story, you stay away.
Either way, this is why you don't chase narratives. You wait for the numbers, compare them to the price, and decide if the risk-reward makes sense. No drama, just math and patience.
So the business is printing money and getting more efficient. Yet the stock was down 45% heading into this report.
This is a textbook example of why price and business performance don't always move together in the short run. Markets price in expectations, not just results. When a stock gets crushed for a year, it's often because investors already expected problems or priced in peak growth.
Now the question: is this a turnaround setup or a value trap? The fundamentals look solid. Margins are expanding. But revenue growth is slowing. If you believe streaming has more room to run and Netflix can keep squeezing profits, this could be interesting. If you think competition and saturation are the real story, you stay away.
Either way, this is why you don't chase narratives. You wait for the numbers, compare them to the price, and decide if the risk-reward makes sense. No drama, just math and patience.