Netflix Stock Down 51%: Should You Buy the Dip?

Netflix has had a tough few weeks. Last week, the company announced layoffs of 1,000 employees, about 6% of its workforce, aiming to improve efficiency. Then, this week's third-quarter earnings report disappointed investors, with revenue growth projected to decelerate to 11.5% year over year in Q4. Shares fell 6% on the news.

The stock is now 51% below its June 2025 high, a level it hasn't seen in over a year. This isn't the first time Netflix has fallen this hard—since its 2002 IPO, it has dropped at least 50% from a recent high five times. Each time, it eventually recovered, often spectacularly. For instance, after a 67% plunge in 2022, the stock surged 137% in the following year.

Historically, Netflix's steep declines were caused by temporary setbacks—like the 2022 subscriber loss that reversed once pandemic demand normalized. The company always bounced back, rewarding patient investors. This history has some investors wondering if now is a buying opportunity.

Netflix currently trades at a price-to-earnings ratio of 18.9, far below its 10-year average of 93.3. That cheap valuation, combined with past resilience, makes the stock look tempting. But the company is not the high-growth disruptor it once was.

Netflix's growth engine is clearly slowing. Management expects 2026 revenue of $51.1 billion, at the low end of prior guidance, and advertising revenue is now projected at $2.7 billion, down from $3 billion. The company stopped reporting subscriber numbers in early 2025, a sign that the best growth days may be behind it.

Viewership hours rose just 2% in the first half of 2026, highlighting Netflix's maturity. Competition is fierce, with rivals like Disney+, Amazon Prime Video, and others fighting for screen time. This competitive pressure could keep a lid on pricing and growth.

The stock's low P/E ratio reflects these challenges. While a 18.9 multiple might look like a bargain compared to history, it may simply be the new normal for a mature company. Investors shouldn't expect the same explosive growth that justified a 93 P/E in the past.

Until Netflix proves that its growth slowdown has stabilized and can reaccelerate, the stock may remain under pressure. The company needs to demonstrate that its ad-supported tier and password-sharing crackdown can drive meaningful growth. Without that, the stock could stay in the penalty box.