Netflix Reaches Record Profits as Stock Pulls Back 35% From Recent Highs

Netflix Inc. is generating record earnings even as its market valuation has dropped sharply from its peak, according to an analysis published by Yahoo Finance. Over the past four quarters, the streaming platform delivered roughly $13.65 billion in net income, easily exceeding the $10.98 billion it recorded across all of 2025.

Despite these record bottom-line results, shares of Netflix have slipped approximately 35% from a 52-week high of $126.71. The stock has been trading near $82, recovering slightly after touching a low of around $72 earlier in the month.

A portion of the recent net income stems from a single non-operational payout recorded in the first quarter. Netflix collected a pre-tax break-up fee of $2.8 billion, amounting to roughly $2.3 billion after taxes, when its planned purchase of studio and streaming assets from Warner Bros. Discovery fell apart after the seller accepted a higher offer from a competing bidder.

Even when backing out the termination payment, core operating performance reached unprecedented levels. Trailing four-quarter operating income totaled about $14.4 billion, topping the $13.3 billion reported for full-year 2025. In its second quarter, operating profit climbed 11% year over year to $4.2 billion, with executive leadership maintaining a 31.5% operating margin target for 2026, up from 29.5% in the prior year.

The primary pressure on the stock stems from a slowdown in top-line expansion. Annual revenue growth peaked at 17.6% in the fourth quarter of 2025 before cooling to 16.2% in the first quarter of this year and 13.4% in the second quarter. For the third quarter, management projects expansion to slow further to 11.7%.

For full-year 2026, corporate forecasts call for total revenue between $51.0 billion and $51.4 billion, representing growth between 13% and 14%. The company's advertising tier is helping bolster overall results, with ad revenues anticipated to roughly double year over year to reach approximately $3 billion.

The broader market has adjusted Netflix's valuation to match its lower trajectory. At its peak price of $126.71, the stock traded at approximately 50 times its 2025 earnings of $2.53 per share. Current pricing places the multiple around 25 on a reported basis, roughly 31 excluding the termination fee, or roughly 21 times projected 2027 earnings as investors recalibrate expectations for a maturing streaming service.