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Just For You Netflix Is Out of Favor—and That's Why It's Getting InterestingWritten by Sam Quirke. Originally Published: 12/28/2025. 
In Brief - Netflix has been one of the worst-performing mega-cap stocks in Q4.
- Investor sentiment has been crushed by doubts about growth and ongoing M&A uncertainty.
- However, improving technicals and overwhelming analyst support suggest a rebound could be coming in Q1.
As we head into the final few sessions of 2025, Netflix Inc. (NASDAQ: NFLX) is on track to finish Q4 as one of the market's clear laggards. Shares of the streaming giant fell roughly 20% over the period, sharply underperforming the S&P 500, which logged a gain of more than 3%. In the broader context, Netflix is trading near where it stood a year ago, having lost more than 30% since its all-time high in July. Overall, the sell-off reflects a broad loss of confidence. Investors have questioned whether Netflix can sustain its historical growth rates, grown uneasy about its proposed acquisition of Warner Bros. Discovery, and remained unsettled by October's weak earnings report. Still, there are reasons to think the worst-case scenario may already be priced in, and the stock's risk/reward profile is beginning to tilt positive. Here's why Netflix could be a comeback contender in Q1. Why the Market May Have Overreacted to Q4 While retail buys Nvidia at all-time highs, institutions position into something else. Why? AI needs POWER. Louis Navellier, who spent 46 yrs Wall St. and called Nvidia at $1, reveals that his grading system shows where the money is REALLY flowing. Companies you've never heard of. Stocks the media never covers. Before Stage 3 begins... Click here for the full story. October's earnings report was a clear disappointment and set the tone for the quarter, but it helps to separate optics from reality. Despite an EPS miss, Netflix still posted its highest revenue print ever, and that detail matters. Demand didn't collapse, nor did the business suddenly lose relevance. Instead, the report damaged confidence in near-term execution and reignited doubts about the durability of growth. Markets tend to punish uncertainty almost as much as, if not more than, bad news, and Netflix was hit with both. Growth skepticism resurfaced just as expectations were elevated, creating the conditions for a rush to the exits and a sharp decline, despite several prior quarters of solid results. This is often how worst-case scenarios unfold: investors stop giving management the benefit of the doubt, sentiment turns decisively negative, and the stock can underperform even when the broader market is doing well. M&A Uncertainty Is Clouding the Picture The situation was complicated further by Netflix's bid for Warner Bros. Discovery. Matters grew more complex when a competing offer from Paramount–Skydance topped Netflix's bid, even though the Warner Bros. board has reportedly recommended shareholders reject that offer in favor of Netflix's proposal. For investors, a potential bidding war raises uncomfortable questions. It introduces the risk of added leverage and a heavier debt load—an unwelcome prospect when balance-sheet discipline is under scrutiny. Even if Netflix ultimately prevails, the process could entail higher costs and prolonged uncertainty before any clear payoff materializes. Technicals and Analysts Are Starting to Align While sentiment has been weak, the technical picture is beginning to suggest the tide may be turning. Netflix's RSI is approaching extremely oversold territory, a level that often signals selling pressure is near exhaustion. At the same time, the MACD is forming a bullish crossover, indicating downside momentum is fading and bulls may be regaining control. Price action is stabilizing as well. The stock has begun to consolidate above the $90 level, and holding that zone into January would reinforce the idea that sellers have largely stepped aside and a recovery rally could be brewing. Analyst behavior has added further support. Over recent weeks, teams at Morgan Stanley, DZ Bank, Jefferies, Wolfe Research, and Needham, among others, have reiterated Buy or equivalent ratings. Some refreshed price targets now reach as high as $152, implying roughly 60% upside from current levels. For sidelined investors, that kind of target is hard to ignore. What Needs to Happen for a Q1 Comeback For Netflix to mount a meaningful comeback in Q1, three things need to fall into place. First, the stock must continue to hold above $90, confirming that consolidation is forming a base rather than preceding lower lows. Second, clarity needs to emerge on the Warner Bros. transaction—ideally without forcing Netflix into a balance-sheet stretch that undermines confidence. Third, January's earnings report should beat expectations and make October's miss look like a rare slip rather than the start of a sustained downturn. If those conditions are met, the setup looks compelling: expectations are low, sentiment is near rock bottom, and the stock is technically washed out. In a market crowded with mega-cap tech names trading near highs, Netflix's depressed price and credible rebound potential would stand out.
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