Is Netflix's Fall From Grace A Buying Opportunity?

Last year, shares of Netflix, Inc. NFLX delivered impressive gains and quickly became one of the most talked about stocks on Wall Street.

The company's dominance in the streaming space combined with impressive growth metrics made the company a lucrative investment, but since the beginning of the year Netflix shares have declined more than 20 percent on worries about the firm's performance in the coming year. This drop has raised several questions about the firm's potential, but also provided a buy-in opportunity for investors looking to establish or expand a position in Netflix.

What Happened?

Investors lost some of their confidence in Netflix after the company's most recent earnings report showed that subscriber growth in the United States, its largest market, slowed. Between missing its Q4 subscriber target and worries about rising competition from firms like Amazon.com, Inc. AMZN, investors were quick to abandon Netflix shares.

Related Link: Amazon Hikes Buyback To $5 Billion

Overdone?

However, many believe that the market's fears are overdone and that traders are focusing on the wrong metrics.

While it's true that subscriber growth has started to level off in the United States, Netflix has a lot of growth potential in the future. The company has expanded into more than 130 countries worldwide and is expected to see its global subscriber base increase exponentially in the coming years. Not only that, but Netflix is planning to make its way into China this year as well, one of the largest markets in the world.

Still An Expensive Buy

While investors' worries about Netflix's future may be overdone, the stock is still expensive— although less so with its recent decline. A lot of the company's potential has already been priced in, and most expect that the firm won't deliver the same more than 100 percent returns it did last year.