Netflix, Inc. (NFLX): Our Calculation of Intrinsic Value

Each week we run a DCF (Discounted Cash Flow) model on a company from our watchlist. This week’s pick: Netflix, Inc. (NFLX).

Profile

Netflix is the world’s leading subscription video-on-demand platform, with a global subscriber base exceeding 260 million. Its scale provides strong recurring revenue, while content investments continue to drive both user engagement and international growth. Despite rising competition from Disney+, Amazon Prime Video, and others, Netflix maintains a pricing advantage and global reach. The company has also started investing in gaming and advertising-supported tiers to diversify revenue streams. Challenges include heavy ongoing content spend, fluctuating free cash flow, and debt management.

DCF Analysis

Inputs

Discount Rate: 10%
Terminal Growth Rate: 3%
WACC: 10%

Forecasted Free Cash Flows (in billions USD)

2025: $9.0B → PV: $8.18B
2026: $9.5B → PV: $7.85B
2027: $10.0B → PV: $7.52B
2028: $10.5B → PV: $7.20B
2029: $11.0B → PV: $6.90B

Total Present Value of FCFs = $37.65B

Terminal Value Calculation

Using perpetuity growth model with 2029 FCF = $11.0B:

TV = (11.0 × 1.03) ÷ (0.10 − 0.03) = 161.9B

Present Value of Terminal Value = $101.75B

Enterprise Value

Enterprise Value = 37.65B + 101.75B = $139.40B

Net Debt

Cash: $9.58B
Total Debt: $15.58B
Net Debt = $6.00B

Equity Value & Per-Share Value

Equity Value = 139.40B − 6.00B = $133.40B
Shares Outstanding: ~428M
Intrinsic Value per Share = $312

Conclusion

DCF Value: $312
Current Price: ~$1,200
Margin of Safety: –74%

While Netflix has strong recurring revenues, global scale, and rising free cash flow, its stock currently trades far above our conservative DCF estimate. This suggests investors are pricing in stronger growth or higher profitability than our base case. For value-focused investors, NFLX appears overvalued under these assumptions.

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