Netflix (NASDAQ:NFLX) tanked in late October after the streaming giant reported third quarter numbers that broadly missed expectations, including a big miss on the all-important subscriber additions number. But don’t write off Netflix stock just yet.

Specifically, Netflix reported just 2.2 million net subscriber adds in the quarter, versus guidance of 2.5 million and down from 10.1 million net adds last quarter.

Many bears are interpreting the rapid slowdown in sub growth as a sign that competition is starting to cut into Netflix’s growth narrative, and as that thesis has gained steam, NFLX stock has trended lower.

But that isn’t what’s happening here.

Instead, what’s happening is a classic “pull forward.” Netflix reported such strong first half 2020 numbers because of the pandemic, that the company pulled forward a lot of its second half demand into the first half.

Big picture, though, Netflix is still set to close 2020 with a record high number of sub adds, and the long-term bull thesis of Netflix turning into a globally ubiquitous streaming TV platform with strong pricing power and big margins remains healthily in-tact.

So buy the dip in NFLX stock. It’s unwarranted. Soon enough, shares will bottom out, reverse course and continue on their long-term uptrend.

The Sub Miss and Netflix Stock

When it comes to Netflix stock, investors are hyper-obsessed with subscriber numbers, because as sub numbers go, so goes the entire Netflix growth narrative.

To that end, it makes sense that a sub miss in Q3 caused material weakness in Netflix stock. But this sub miss needs to be contextualized.

Netflix beat its Q1 net adds guide by 9 million subs, and its Q2 net adds guide by 3 million subs. That was followed by a measly 300,000 sub miss on the Q3 guide. So, year-to-date on a cumulative basis, Netflix is still up ~12 million subs versus its initial net adds guide, and the company is still set to close 2020 with a record high number of net adds (34 million subs, versus a previous high of 28.6 million in 2018).

On top of all that, subscriber retention rates remain high and engagement per household continues to rise year-over-year — meaning the subscriber base remains sticky, engaged and overall very healthy.

So, no, competition isn’t driving a significant slowdown in Netflix’s subscriber growth trajectory. Rather, the pandemic caused a temporary acceleration and subsequent deceleration in the growth trajectory. Nothing more.

If it were more, you’d see things like retention go down, or churn go up, or engagement fall. But none of those things are happening.

This pandemic-driven noise in Netflix’s growth trajectory will become less intense going forward, and ultimately drown out at some point in 2021. As it does, it will be back to business as usual for Netflix — and that’s great news for NFLX stock, because business as usual means sustained big growth.

Netflix Earnings Were Actually Good

Backing out the subscriber numbers, all the other numbers and developments announced in Netflix’s third quarter earnings report were actually very, very good.

Average revenue per user (or ARPU) ex foreign exchange changes rose 1% due to favorable plan mixes and price hikes. The operating margin clocked in at 20%, up 170 basis points year-over-year. Fiscal 2020 operating margins are now expected at 18%, up 500 basis points year-over-year. Revenues rose 23%. Operating profits rose 34%.

Netflix also restarted production in the quarter on some major projects, including the fourth season of Stranger Things, a second season of The Witcher, and new hit-film dubbed Red Notice featuring Dwayne Johnson and Ryan Reynolds.

Perhaps most importantly, Netflix’s cash flow situation continues to dramatically improve. For years, this was a company which burned cash like there was no tomorrow, and had to tap into the debt markets to finance content production.

But, according to the company’s CFO, Netflix is close to becoming sustainably free cash flow positive and being able to self-finance its own projects — which means no more cash burn and no more debt.

In the big picture, then, Netflix’s earnings were actually pretty good, meaning the recent sell-off in NFLX stock is unwarranted.

Long-Term Bull Thesis Remans Intact

The long-term bull thesis on NFLX stock remains healthily intact.

That is, every consumer from every country is still rapidly pivoting from linear TV to streaming TV, and Netflix is still the world’s most popular and widely used streaming TV platform, with huge content, technology, branding and distribution advantages which should ensure that Netflix remains the world’s leading streaming TV platform for the foreseeable future.

In other words, Netflix is still marching towards global ubiquity among internet households, and competition isn’t getting in its way.

Assuming so, my numbers say that Netflix stock is worth about $480 today.

Sure, that means Netflix stock is fairly valued, not undervalued. But in this market where investors are rushing into technology stocks like there’s no tomorrow and where fixed income instruments aren’t even beating inflation, a fairly valued, large-cap growth stock with tremendous visibility to long-term growth is a great deal.

So… buy NFLX stock on this post-earnings dip. Current weakness in a name like this won’t last long in this market.

Bottom Line on Netflix Stock

Netflix stock is a long-term winner, and despite a slight miss on subscriber numbers, the company’s Q3 earnings report broadly confirmed that the long-term bull thesis supporting Netflix remains healthily intact.

The post-earnings dip in NFLX stock, then, is little more than a golden buying opportunity into a long-term winner.