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Netflix (NFLX) reported 1Q23 earnings Tuesday afternoon and the results confirm for me that it is no longer a growth stock. NFLX’s hypergrowth phase is over – and the stock’s valuation multiple should start reflecting that.

NFLX added 1.75 million paid streaming subscribers and revenue grew less than 4%. In 2022, NFLX added ~9 million paid streaming subscribers and revenue grew 6.5%. These are the growth numbers of a mature company – not a highflyer.

And yet NFLX is still trading at more than 30x what it is likely to earn this year. Markets are frequently slow to realize when formerly fast-growing, high fliers mature into stable stalwarts (“AAPL Is Not A Growth Stock Anymore But It’s Still Priced Like One”, Top Gun Financial, April 28, 2022). But the numbers don’t lie. It’s hard for me to believe that NFLX is worth more than a 20x multiple on current earnings at this stage of its growth cycle which means the stock is only worth ~$200.

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