Up More Than 330% Since 2023, Is It Too Late to Buy Netflix Stock?

It has made ing fitable, and done so while creating plenty of its own movies and television shows

It has also gotten into gaming and sporting events, diversifying its growth opportunities along the way

The has been unstoppable in recent years

Growth investors have been rewarding the company for its tremendous results

The question now is whether the stock has become too expensive

Can Netflix still rise even higher, and is it a good buy today, or could it be apaching a peak

Image source: Getty Images

Netflix's valuation has ballooned significantly There's no doubt that Netflix has performed well in recent years, but when a stock rallies so rapidly, its valuation can start to get out of control

Currently, the ing stock is trading at over 60 times its trailing earnings

That's elevated compared to its five-year average

NFLX PE Ratio data by YCharts

PE = price-to-earnings

Analysts also believe the stock may have run out of room to run

Does Netflix's growth rate justify its high premium

If a is growing at a fast pace and expectations are high, it can make it easier to justify paying a significant premium for a stock

Netflix has been growing in double digits in recent quarters, but things have been slowing down noticeably of late

NFLX Operating Revenue (Quarterly YoY Growth) data by YCharts

This is arguably not the growth rate you might expect for a that's trading at more than 60 times its earnings

The blem is that this means speculation may be playing a big role in the stock's high price today, which could make in the today a risky endeavor

Should you invest in Netflix stock today

But there's no denying that the stock is incredibly expensive right now

Buying a stock that's as highly valued as Netflix is leaves virtually no margin of safety should the struggle unexpectedly, or if its growth rate slows down further

In fact, I believe it's already overdue for a correction

As excellent a as Netflix is today, this is a stock I'd put on a watch list rather than invest in right now

At such a high valuation, there's simply too much downside risk, and there are many other, cheaper growth stocks to consider instead

David Jagielski has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Netflix

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