Netflix recently executed a 1:10 stock split, and I spent some time reviewing it yesterday. $Netflix (NFLX.US)$The following conclusions are based on financial data from the past few years (2019-2025), business development, and an analysis of technical chart trends.

1. The valuation is significantly high, lacking long-term safety margin.

The current PE ratio is 45.95, significantly higher than the industry average, with PS and PB both at historically high percentiles (74% to 87%).The FCF/P ratio is only 1.43%, indicating an unattractive long-term return for a company with a market capitalization exceeding RMB 460 billion due to relatively low free cash flow. The use of leverage has led to a high interest-bearing debt ratio (55.73% as of 2025Q3), which may compress profit margins.This valuation represents a typical case of 'good company, expensive price,' making it less suitable as a starting point for long-term investment.

2. The technical structure is within a medium-term consolidation zone, failing to present a trend-based buying opportunity.

Daily K-line / Weekly K-line shows: the medium-term trend remains relatively weak.

The range of 112–118 represents a dense resistance zone.

No bottoming structure or trend reversal signal has appeared.

In the short term, range trading is suitable, but it is not appropriate for establishing long-term positions.

3. The long-term margin of safety price is significantly lower than the current stock price.

Based on valuation models (EPS × reasonable PE, FCF Yield derivation, etc.):

Long-term value range: $55–$70

Deep safety margin range: $32–$55

If we look at the bottom near $70 ($80+) during this year's significant tariff drop, the current price of $110 has far exceeded the 'value buying point' and no longer meets the cost requirements for long-term holding.

4. Strong fundamentals, but the growth structure is transitioning from an 'acceleration phase' to a 'realization phase'

Profitability is robust (ROE >40%, ROIC >26%), but:

Global subscription growth has entered a plateau phase. While the advertising business remains strong, its growth is currently not exponential, indicating that it can still compound over the long term but is unsuitable for entry at a high valuation starting point.

5. The interest rate environment is unfavorable for the starting purchase point of high-valuation assets.

Netflix's valuation is highly sensitive to interest rates:

Declining interest rates → Valuation expansion

Rising interest rates → Valuation compression

The current high price makes the variable of interest rates more sensitive to downside risks.Considering the potential upcoming interest rate cuts, the stock price may see some improvement.

Therefore

A. Long-term investors (5–10 years)

True safety margin price: $55–$70

This is based on: EPS × PE (reasonable, slightly premium)

Target FCF/P ratio: 3-4%

Netflix's leadership position in the industry

This range presents very low long-term risk and high returns.

B. Medium- to long-term investors (2-5 years)

Acceptable range: $75–$90

This does not represent a true margin of safety, but given that EPS continues to grow, ad revenue progresses, FCF remains stable, and ROIC and ROE are strong, purchasing within $75–$90 can generate profits over the long term, albeit with potentially moderate returns.

C. Short-term/Range traders

Technical range: $107–$112

This range is suitable for swing trading but less ideal for 'long-term bottom-fishing holdings'.

Final Summary:

Given the current overvaluation, the absence of a trend reversal, and the lack of long-term margin of safety,choosing to wait on the sidelines is more reasonable than blindly building positions.Netflix represents a high-quality asset suitable for long-term holding, but the appropriate level for establishing core positions is:

$55–$70 (Value Buy Range)

$32–$55 (Deep Margin of Safety)

The current price of $110 is more suitable for considering short-term range trading rather than as a starting point for long-term investment.

This provides an alternative perspective for consideration. If one believes that long-term investments in quality companies will compound returns and that overvalued prices will gradually rise, this overlooks the opportunity cost and risks involved. Such a scenario should be compared to investing in QQQ. Choosing to buy Netflix instead of QQQ implies the belief that Netflix will outperform QQQ annually, including surpassing the leading constituents of QQQ such as M7. Additionally, it is important to consider that the downside risk of a single company like Netflix differs from that of QQQ, as individual companies may face decision-making errors or significant setbacks, especially those with high leverage. These are all critical factors to consider in long-term investment strategies.