Is Netflix Stock an Undervalued Stock to Buy? | NFLX Stock Discounted Cash Flow Valuation
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Parkev Tatevosian, CFA29 May 2026, 12:45 UTC
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The analysis focuses on Netflix (NFLX) as an undervalued stock. The presenter performs a discounted cash flow valuation, projecting free cash flows from 2024 to 2035. Key assumptions include a weighted average cost of capital (WACC) of 10.44%, a cost of debt of 5.75%, and a cost of equity of 12% with a beta of 1.25. The risk-free rate is estimated at 4.5% and the market risk premium at 6%. These inputs lead to a calculated intrinsic value per share of $125.15. The analysis suggests that Netflix's business model, driven by subscriber growth and original content creation, is sustainable and likely to improve. The company's financial strategy involves increasing debt and decreasing equity in its capital structure as it matures, leading to a lower cost of capital over time. The presenter contrasts this with the risk associated with traditional cable and satellite subscriptions, highlighting the shift towards streaming. The current market price of NFLX is $87.68, indicating a significant discount to its estimated intrinsic value.
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Parkev Tatevosian, CFA
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