NEW YORK Netflix (NFLX) shares maintain a valuation discount as investors focus on U.S. market dynamics, Deutsche Bank analysis shows. The firm highlights international subscriber growth as a key underappreciated catalyst for the streaming giant.
Skeptics previously cited Netflix's lack of positive free cash flow as a concern. However, the company generated $11 billion in free cash flow over the last 12 months. This shift has redefined its financial position.
Full-year 2026 revenue guidance was reaffirmed between $50.7 billion and $51.7 billion. This projects a growth rate of 12 percent to 14 percent, supporting a bull case for the stock.
Despite the positive financial indicators, Netflix faces strong competition in its home market. Alphabet Inc.'s (GOOGL) YouTube emerged as Netflix's primary rival for U.S. viewers.
YouTube's share of the U.S. TV market reached an all-time high of 14.2 percent in July. This data comes from Bloomberg Intelligence, which utilizes Nielsen's most recent monthly figures.
Conversely, Netflix's share of the U.S. TV market dropped below 8 percent during the same period. HSBC analyst Mohammed Khallouf said YouTube's gains are "increasingly coming at the direct expense of Netflix."
Netflix's bull case rests on the perceived gap between its business performance and its stock price. Investors have yet to fully price in the company's financial improvements and global expansion.
Netflix traded at $717.04 today, up 0.2 percent. The broader S&P 500 fell 0.4 percent, while the Nasdaq declined 0.3 percent on the day.
