Netflix, Inc. (NFLX): A Bull Case Theory 

We came across a bullish thesis on Netflix, Inc. on Quality Value Investing’s Substack by David J. Waldron. In this article, we will summarize the bulls’ thesis on NFLX. Netflix, Inc.’s share was trading at $79.94 as of February 3rd. NFLX’s trailing and forward P/E were 33.00 and 26.45 respectively according to Yahoo Finance.

Netflix, Inc. provides entertainment services worldwide. NFLX is transitioning from a pure growth story into a mature global media platform, and the market narrative has not fully caught up with this shift. For years, subscriber growth was the sole driver of sentiment, but the focus is now squarely on profitability and cash generation.

Netflix’s decision to stop reporting subscriber numbers in 2025 initially unsettled investors, yet this change reflects a business that no longer needs to chase headline growth to create value. Through ad-supported tiers, password-sharing crackdowns, and incremental initiatives like gaming, Netflix is monetizing its existing user base more effectively, even if subscriber growth moderates.

Operationally, the business is stronger than ever. Profit margins have reached record levels of around 22%, marking a dramatic improvement from its historically cash-intensive phase. Free cash flow continues to trend higher, validating that Netflix can fund content investments internally without relying on debt. At the same time, valuation has reset to more reasonable levels, with the forward P/E sitting near the middle of its historical range, suggesting the stock is neither cheap nor stretched despite improved fundamentals.

Intrinsic value analysis points to an asymmetric setup: downside risk of roughly 34% versus upside potential of 27% to as much as 70% over the next 12–24 months. Recent Buy ratings from major banks reinforce this view, even as some price targets were trimmed. The key risks center on reduced transparency around subscribers, noise-driven cancellation campaigns, and, most notably, uncertainty around a potential Warner acquisition, which could either enhance long-term dominance or damage near-term value depending on the outcome.

At around $90, Netflix appears slightly undervalued and attractive for long-term investors willing to average in. The core question is no longer whether Netflix can grow, but how efficiently it can convert that scale into sustainable cash flows—and current margins suggest it has found the formula.

Previously, we covered a bullish thesis on Netflix, Inc. (NFLX) by Margin of Sanity in May 2025, which highlighted the hidden value embedded in Netflix’s content library due to conservative amortization accounting. NFLX’s stock price has depreciated by approximately 32.93% (adjusted for stock split)  since our coverage. David J. Waldron shares a similar view but emphasizes profitability expansion, cash flow generation, and Netflix’s transition into a mature media platform.

Netflix, Inc. is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 154 hedge fund portfolios held NFLX at the end of the third quarter which was 133 in the previous quarter. While we acknowledge the risk and potential of NFLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFLX and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.