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Further Reading from MarketBeat Is Netflix a Buy Ahead of Earnings? It Looks Like ItAuthor: Sam Quirke. Published: 1/12/2026. 
Key Points - Netflix has given back basically all of its 2025 gains after a multi-month selloff exacerbated by poor earnings and uncertainty about its Warner Bros. deal.
- However, technical indicators are flashing oversold just as a key catalyst appears on the horizon.
- Analyst sentiment remains broadly bullish, suggesting much of the bad news may already be priced in.
Shares of streaming giant Netflix Inc. (NASDAQ: NFLX) head into their next earnings report in an uncomfortable position. Since hitting all-time highs last summer, the stock has fallen roughly 30% in a sustained downtrend, effectively erasing its 2025 gains. For a name once viewed as an ultra-reliable performer, the drop has been jarring. The selloff has been driven by a combination of factors rather than a single shock. The stock was already on the back foot heading into October's earnings report, and the missed earnings per share (EPS) result only added to the negative sentiment. The former CEO of Google calls it the most important thing to happen in 500, maybe 1,000 years of human society. A former U.S. Treasury Secretary says when your great-grandchildren write the history of this period, the political headlines will be the second or third story. The first story is something none of us have seen before. The dot-com collapse, global financial crisis, and COVID-19 pandemic don't compare to what's coming next. We may be entering a period of dramatic, almost unimaginable change. See the full warning and how to prepare now. Since then, uncertainty around Netflix's proposed acquisition of Warner Bros. Discovery (NASDAQ: WBD) has further weighed on the shares, as investors remain uneasy about rising debt levels, execution risk and strategic distraction. However, with its next earnings report due in under two weeks, there are reasons to think much of the downside is already priced in—here's why this could be a buy-the-dip opportunity. Why the Dip Is Starting to Look Compelling From a technical perspective, Netflix is beginning to show signals that selling pressure may be stretched. The stock's relative strength index (RSI) sits around 29, squarely in oversold territory. That alone doesn't guarantee a reversal, but it suggests downside momentum has become extended. Adding to that, the stock's MACD recently printed a bullish crossover, a reliable indicator that bearish momentum is starting to fade. The company's valuation also looks very different from last summer. Netflix's price-to-earnings (P/E) ratio is at its lowest level in years, reflecting a sharp reset in expectations and supporting the case that the shares are trading at a discount. For long-term investors, that matters—a lower entry point can make it easier to weather near-term volatility. Aside from October's EPS miss, Netflix has a solid track record of beating analyst expectations on a quarterly basis. That history doesn't erase recent disappointments, but it does make it harder for the bears to argue that further downside is inevitable. Analysts See Far More Upside Than Downside Sell-side commentary suggests the market may be leaning too far toward worst-case assumptions. In recent weeks, both Morgan Stanley and Wolfe Research have reiterated Buy or equivalent ratings, with price targets around the $120 mark—notable given the stock is trading near $90 currently. Even more cautious voices imply upside. CFRA downgraded Netflix to a Hold earlier this month but attached a $100 price target. With the shares trading below that level, even a neutral stance suggests the stock is oversold rather than expensive. The common thread across analyst commentary is that a large portion of the disappointment is likely already reflected in the price. Concerns around the Warner Bros. deal have been widely debated, and there's limited room for fresh negativity unless earnings miss materially worse than expected. Some Risks Remain None of this removes the risks. Netflix is heading into this month's report with more riding on the results than usual, and another sizable miss would likely trigger further selling. Investors will also want clarity on the company's strategic direction and how the Warner Bros. proposal may affect execution. That said, the setup is asymmetric. With the stock down about 30% from its highs, sentiment weak and valuation compressed, downside from here appears more limited than at many points over the past year. Any signs that growth is accelerating or that profitability is stabilizing should spark a sharp recovery rally. The tricky part is timing. Buying ahead of earnings always carries uncertainty. But with expectations low and much disappointment already priced in, the risk/reward profile currently leans in favor of the bulls.
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