NETFLIX INC (NFLX) stock intrinsic value fair value estimate & owner earnings analysis

Netflix is the global leader in subscription video streaming, with roughly 300+ million paid memberships across more than 190 countries, supplemented by a fast-growing ad-supported tier and an emerging live-events business (including WWE Raw and NFL games). The company's core economics have shifted meaningfully since 2023: a broad crackdown on password sharing, the launch and scaling of the ad-supported tier, and repeated price increases have driven a sharp acceleration in cash generation, even as underlying subscriber growth has moderated in its most mature markets. We measure the value of the business using owner earnings -- the cash the business generates after covering the true cost of running and renewing it, adjusted to remove non-cash stock compensation and the swings created by short-term working-capital timing. One judgment call is central to this analysis: Netflix's spending on content (films, series and licensed programming) works economically like the inventory or cost of goods of any other business -- cash goes out to produce or license titles, and that cost is recognized against revenue over the following few years as the titles are watched. We treated this content spend, net of its associated amortization, as an ordinary recurring cost of doing business rather than as a one-time investment, so it flows straight through into owner earnings exactly as reported in the cash flow statement. What we did strip out, as a pure timing item, is the swing in how quickly Netflix pays down its content vendors and other short-term payables, receivables and deferred revenue -- these move up and down with the calendar and would otherwise make owner earnings look choppier than the underlying business really is. We also separated Netflix's much smaller property-and-equipment spending (data centers, offices) from content spending; only that traditional capital spending is split between what is needed to sustain the business as it is today and what is funding growth. On that basis, owner earnings per share have grown from roughly breakeven in 2020 to about $1.63 in 2023, $1.71 in 2024 and $2.36 in 2025 -- a striking acceleration tied to the password-sharing crackdown, price increases and the ramp of advertising revenue. We anchored our valuation on the middle of the last three full fiscal years (2023-2025) -- about $1.71 per share -- rather than the most recent, highest figure, because one very strong year is not by itself proof of a new permanent level. The most recently completed year's growth (roughly 38%) is unusually high, reflecting one-off catch-up effects from the password-sharing crackdown, so our base case assumes materially slower, though still healthy, growth from here. Our base case assumes owner earnings compound at roughly 20% in year one, decelerating steadily to around 5% by year ten as password-sharing conversion fully plays out and international and advertising growth continue but at a moderating pace amid intense competition for viewing time. Beyond year ten, we assume Netflix settles into modest, sustained growth (around 1% a year) funded entirely out of the content spending already embedded in owner earnings -- the content library is a renewing asset, not a wasting one, so unlike a business facing a patent cliff there is no dated event forcing per-share earnings toward zero. That said, the value attributable to this beyond-year-ten period is a large share -- roughly two-thirds -- of our overall estimate, so a meaningful part of what Netflix is worth today rests on our judgment that the platform, content library and global subscriber relationships keep producing modest real growth indefinitely, funded by spending Netflix is already making. That is a real assumption, not a certainty, and it is the single biggest driver of the valuation. Our bear case (roughly the worst outcome we would expect in one year out of ten) assumes subscriber growth in Netflix's largest, most mature markets essentially stalls, competitive bidding for marquee content -- particularly live sports rights -- pushes content costs up faster than revenue, and the advertising tier's revenue-per-subscriber growth disappoints as advertiser demand proves softer than hoped. Under that scenario owner-earnings growth slows to the low single digits and we estimate the business is worth around $37 per share. Our bull case (roughly the best outcome we would expect in one year out of ten) assumes the advertising business scales faster and more profitably than expected as Netflix's ad technology matures across all ad-supported markets, live sporting events continue to drive both subscriber growth and incremental advertising revenue without proportionate cost increases, and international markets in Latin America and Asia-Pacific sustain strong subscriber growth for longer. Under that scenario we estimate the business is worth around $132 per share. Putting these together, our estimate of fair value today is around $88 per share, with a plausible range of roughly $37 to $132 depending on how the drivers above play out. Given the width of that range, the margin-of-safety price is meaningfully below our estimate of fair value -- around $52 per share -- to allow for the risks in the bear case. We found no evidence of any disqualifying issues: Netflix is a US-domiciled, non-Chinese, non-cannabis, non-crypto operating company with no going-concern doubt or apparent delisting risk in its filings.