Netflix Approaches Year High Amid Strong Technical Momentum and Elevated Valuation Metrics

Technical Analysis

Netflix (NFLX) closed at $1,241.48 on June 6, 2025, down 0.72% from the previous session. The stock traded within a range of $1,235.55 to $1,260.00, nearing its year high of $1,262.81. The Relative Strength Index (RSI) stands at 68, indicating the stock is approaching overbought conditions but still has some momentum. The 50-day moving average ($1,083.85) and 200-day moving average ($906.08) remain well below the current price, reflecting strong upward momentum over the medium and long term. The MACD (3-month) at 32.63 confirms bullish momentum. Resistance is near $1,250.52, close to current trading levels, with support at $1,040.34 and a stop-loss advised around $1,192.87. Average volume (4.71 million) surpasses recent volume (2.53 million), suggesting possible volatility but lower trading interest yesterday.

For the next trading day (June 9), the stock may test resistance near $1,250. Given the recent slight pullback and RSI near 70, a short-term consolidation or minor retracement is likely before any further leg higher. For the upcoming week, assuming no significant negative catalysts, the stock could retest or marginally exceed the current year high around $1,262, supported by strong technical momentum and positive analyst price targets.

Fundamental Analysis

Netflix’s trailing twelve-month EPS is $21.11 with a Price-to-Earnings (P/E) ratio of approximately 58.81, reflecting high growth expectations priced into the stock. Market capitalization stands at $528.33 billion, placing it firmly in the megacap category. The discounted cash flow (DCF) valuation is approximately $152.38, which is substantially lower than the current market price, indicating a significant premium in market valuation compared to intrinsic cash flow-derived value. This discrepancy is consistent with growth-oriented tech stocks commanding elevated multiples due to expected future earnings and subscriber expansion.

Analyst consensus is bullish with 58 buys, 27 holds, and only 5 sells, producing an overall "Buy" consensus. Price targets range from a low of $715 to a high of $1,340, with a median at $1,150 and consensus at $1,126.43, suggesting some analysts view the stock as overvalued at current levels but others anticipate further upside. Upcoming earnings on July 17 could act as a catalyst, especially if Netflix continues to demonstrate revenue and subscriber growth momentum.

Intrinsic Value and Long-Term Investment Potential

Netflix’s current valuation is elevated relative to intrinsic value metrics like DCF, implying reliance on sustained high growth rates and market leadership in streaming. The stock has shown strong resilience, climbing from below $200 in mid-2022 to over $1,200 now, signaling market confidence in long-term fundamentals. Long-term potential will largely depend on Netflix’s ability to maintain subscriber growth, expand its content library profitably, and efficiently manage costs amid increasing competition. The company’s sizable market cap, brand strength, and content pipeline constitute important moats, but valuation premiums warrant caution.

With a P/E near 59, the stock exhibits considerable sensitivity to changes in growth outlook or wider market volatility. The significant gap between market price and DCF intrinsic value indicates a strong growth premium priced in, which could compress if growth decelerates or competition intensifies.

Overall Evaluation

Netflix qualifies as a Hold candidate at current price levels. The stock is technically strong and underpinning a positive short to medium-term momentum, yet elevated valuation metrics and a DCF discrepancy suggest that much of the growth is already priced in. Near-term risks include short-term consolidation given RSI constraints and the potential volatility as it approaches resistance. The analyst sentiment and positive earnings momentum support a constructive outlook but with limited margin of safety for new buyers at the current price.

Investors prioritizing growth and with a longer-term horizon might view Netflix as an opportunity contingent on stable subscriber and earnings growth, while risk-averse participants may prefer to wait for a more attractive valuation entry point below intrinsic value estimates and analyst median targets.