The Netflix stock price is down another 4.8% in early trading this morning (Friday) and has now dipped 13.3% since Aug. 6.
Yesterday, shares of Netflix Inc. (Nasdaq: NFLX) were down 7.8% as many tech stocks felt the heat of the market's sell-off. On Thursday, the Dow Jones Industrial Average fell more than 350 points, and the Nasdaq dropped 141 points.
Many media companies were crushed as well. Shares of Walt Disney Co. (NYSE: DIS) fell 6%, while Time Warner Inc. (NYSE: TWX) dropped 5%. CBS Corp. (NYSE: CBS) shares dropped 5.2% on Thursday.
But the Netflix stock price had the largest drop. NFLX shares were trading just above $106 at 10:00 a.m. Thursday.
Despite the dip, the Netflix stock price has still gained more than 119% in 2015. In the last three months, shares are up 20.1%. The Dow Jones has fallen 5.9% in 2015 and 8.3% in that time.
But even after this week's sell-off, Netflix stock is still one of the most overvalued stocks on the market.
Here's a look at some of the troubling figures...
Why the Netflix Stock Price Is Overvalued
Many investors look at NFLX stock as more affordable now because the company recently completed a 7-for-1 stock split. That brought share prices down from about $700 to roughly $100.
But it's important to remember that while the price of Netflix shares was lowered by the split, their value has remained the same.
Right now, Netflix's trailing P/E ratio is 237, according to Yahoo! Finance. For comparison, Apple Inc. (Nasdaq: AAPL) has a P/E ratio of 12.7, and Microsoft Corp. (Nasdaq: MSFT) has a P/E ratio of 30.4.
Another good barometer for a stock's value is its price/earnings to growth (PEG) ratio. A PEG ratio of 1.0 is considered fair value for a company. Right now, Netflix has a PEG ratio of 23.4. That means it is heavily overvalued.
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