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Netflix, Inc. (NFLX) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Netflix, Inc. (NFLX)

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Intrinsic Value (DCF)

Current$89.41
→
Intrinsic$58.01
-35%
$38.03$58.01$97.71
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $38 → Bull $98. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
8%$74$80$87$94
10%$50$54$58$63
12%$37$40$43$46
14%$29$31$33$36

Bull Case

  • Bull case ($98) offers 9% upside at 30% growth, 8% discount

Bear Case

  • Bear case ($38) implies 57% downside at 20% growth, 12% discount
  • Trading 35% above base case — execution must exceed assumptions to justify
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$8.65B
Year 2$10.82B
Year 3$13.52B
Year 4$16.90B
Year 5$21.12B
Terminal$334.73B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$6.92BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is NFLX stock undervalued or overvalued?
🔴 OVERVALUED

NFLX trades at $89.41 vs. our DCF-derived intrinsic value of $38.73, implying -57% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($58.58) suggests limited upside.

What is NFLX's intrinsic value?

Using a 5-year DCF model: Base FCF of $6.92B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $10.19B net debt and dividing by 4.39B shares: Bear $25.19 | Base $38.73 | Bull $58.58. Current price $89.41 implies -57% to base case.

How is NFLX's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($180.33B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.