Netflix Looks Cheaper As Business Improves, Trader Says
Is trading near 18.9x forward earnings as analysts point to ad growth, share buybacks and live sports. One trader says the business has improved even as the…
NEW YORK — Netflix stock is drawing fresh bullish attention after trader Mike Khouw said the company’s fundamental story still holds up even as the share price has fallen. In a CNBC interview on July 27, 2026, Khouw said the stock looks cheaper while the business keeps improving.
The setup matters for investors watching whether the streaming giant can turn stronger margins and ad growth into a steadier share price. Netflix is now trading at 18.9x forward earnings, near its 2022 bear-market trough, according to CNBC’s report, even as the company leans on buybacks, advertising and new content to support growth.
Valuation has reset
Khouw said Netflix has “gotten cheaper while the underlying business has gotten better.” CNBC reported that the stock had moved down close to its 2022 low valuation, when it traded at less than 15x forward earnings. The current multiple, he said, sits only about four turns above the worst moment in the company’s public history.
That matters because valuation has become one of the biggest debates around Netflix stock. Growth investors once paid for subscriber expansion. Now the market is watching revenue, margins and free cash flow more closely. Khouw argued that shift makes the company easier to own if it keeps delivering stronger profits.
Advertising is becoming the engine
Netflix’s ad business is at the center of that case. CNBC cited a target of roughly $3 billion in ad revenue this year, with a path toward $10 billion by 2030. The company’s default ad tier gives it access to a large connected TV audience, which Khouw described as a strong monetization base.
Netflix also has about 325 million paying members, according to CNBC. That scale gives advertisers a broad pool, while management keeps pushing into live sports, spectacles and AI-driven personalization to defend viewing time and pricing power.
Small detail, big effect.
Buybacks and AI support the thesis
Management is also buying back stock instead of chasing expensive legacy media assets, CNBC reported. Khouw said generative AI should help lower production, dubbing and localization costs, which would feed into margins because content amortization remains the company’s biggest expense.
That combination — higher ad revenue, better margins and stock repurchases — is what keeps bulls engaged even after a rough stretch for the shares. CNBC said Netflix stock has become cheaper while the business has improved, a contrast that traders often look for when a growth name resets.
Ackman’s move adds another layer
A separate report from finance.yahoo.com added another reason the stock is back in focus. It said Bill Ackman re-entered NFLX after previously losing $400 million on the trade, and that Pershing Square’s new Netflix stake represented roughly 4.9% of Pershing Square USA’s portfolio.
That report also said Netflix was trading at $77.77, down 17.05% year to date and 37.54% over the trailing year, with shares 26% below the 52-week high of $126.71. It cited a 12-month price target of $177.27, implying 127.94% upside, while noting Q2 2026 revenue rose 13.4% to $12.56 billion, EPS of $0.80 beat consensus, and operating margin expanded to 33.4%.
For now, traders are watching whether the ad business keeps scaling and whether the market keeps rewarding Netflix’s heavier focus on profitability. The next test is whether those numbers can hold up into the next earnings cycle.
