Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Netflix, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 13.3% to 8.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 18, DPO 15, DIO 60). At a 8.2% WACC with mid-year discounting, the terminal value (74% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $38.85 per share, suggesting NFLX is overvalued by 58.8% at the current price of $94.28.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 10,740 | 11,984 | 13,198 | 14,222 | 15,420 | 15,805 |
| (−) Net Interest | 1,084 | 1,210 | 1,333 | 1,436 | 1,557 | 1,596 |
| (+) D&A | 482 | 515 | 587 | 687 | 782 | 801 |
| EBITDA | 12,306 | 13,709 | 15,118 | 16,345 | 17,759 | 18,203 |
| (−) Tax | 1,422 | 1,586 | 1,747 | 1,882 | 2,041 | — |
| (−) CapEx | 690 | 770 | 848 | 914 | 991 | — |
| (−) ΔWC | 4,412 | 706 | 689 | 581 | 680 | — |
| Free Cash Flow (FCF) | 5,782 | 10,646 | 11,834 | 12,968 | 14,047 | — |
| Peers' EBITDA Multiple | 10.5x | |||||
| Terminal Value | 190,946 | |||||
| WACC / Discount Rate | 8.20% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,559 | 9,460 | 9,718 | 9,842 | 9,854 | 128,771 |
| Enterprise Value | 173,204 | |||||
| Projection Period | 44,433 | 25.7% | ||||
| Terminal Value | 128,771 | 74.3% | ||||
| (−) Current Net Debt | 5,429 | |||||
| Equity Value | 167,775 | |||||
| (÷) Outstanding Shares | 4317M | |||||
| Fair Price | $39 | -58.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.5x | 8.5x | 10.5x | 12.5x | 14.5x |
|---|---|---|---|---|---|
| 6.2% | $30 | $36 | $42 | $49 | $55 |
| 7.2% | $29 | $35 | $41 | $46 | $52 |
| 8.2% | $27 | $33 | $39 | $45 | $50 |
| 9.2% | $26 | $32 | $37 | $43 | $48 |
| 10.2% | $25 | $31 | $36 | $41 | $46 |
Current price: $94.28. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.