Netflix Wins Korean Tax Battle as $25 Billion Buyback and Live Sports Strategy Take Center Stage

Netflix secures a landmark tax victory in South Korea and authorizes a $25 billion buyback, but shares remain 32% below highs as live sports and ad strategies face scrutiny.

Netflix is juggling multiple narratives as it enters the second half of 2026. A landmark legal victory in South Korea has erased a multi-million dollar tax liability, while a freshly approved $25 billion share buyback signals confidence in the company’s financial firepower. Yet the stock remains under pressure, trading roughly 32% below its 52-week high, as investors weigh an ambitious live sports and advertising strategy against a quarterly outlook that missed Wall Street’s estimates.

Seoul Court Overturns $46.6 Million Tax Claim

A court in Seoul has thrown out a tax demand worth approximately 46.6 million US dollars that the Korean tax authority had levied against Netflix’s local subsidiary. The authorities had classified payments made by the Korean unit as royalties, making them subject to licensing taxes. The court disagreed, ruling that the payments constituted corporate profits and were therefore not liable for such taxation. The original claim had been even larger, standing at around 54.4 million dollars before the reduction.

The ruling provides a welcome tailwind for Netflix’s Asian operations, a region where the company is seeing rapid adoption of its ad-supported tier. In both South Korea and Japan, more than half of all new subscriptions now come from the cheaper, ad-funded plan. Local content dominates viewing habits in these markets—accounting for 63.9% of watch time in South Korea and 57% in Japan—while in Australia, homegrown shows make up just 4% of viewing, with US hits like Wednesday and Stranger Things topping the charts.

A $25 Billion Bet on Itself

On the same day as the Korean ruling, Netflix’s board authorized a new share buyback program worth $25 billion. The move comes on top of a previous repurchase plan launched at the end of 2024, which still had around $6.8 billion outstanding as of March 31, 2026. The company’s cash reserves currently stand at roughly $12.3 billion, giving it ample room to execute both buybacks and heavy investment.

The capital return program runs in parallel with an aggressive content spending plan. Management has earmarked approximately $20 billion for content production in 2026 alone, signaling that returning cash to shareholders and funding growth are not mutually exclusive priorities.

Live Sports: Selective Strikes, Big Returns

Netflix’s approach to live sports is deliberately surgical. Rather than shelling out billions for full-season packages, the company is cherry-picking high-impact events. The strategy is paying off in terms of user engagement. For the exclusive NFL games on Christmas Day, Netflix is paying an estimated $75 million per match—a fraction of what traditional US broadcasters fork out for weekly packages.

The World Baseball Classic recently drew over 31 million viewers in Japan, delivering the single best day for new sign-ups in the company’s history in that market. Starting in 2026, a new three-year deal with Major League Baseball will bring select prime-time games to the platform, further deepening the live sports roster.

Advertising Ambitions: Doubling Down

Live events are proving to be a powerful engine for Netflix’s advertising business. The ad-supported tier now accounts for more than 60% of new sign-ups in markets where it is available. The number of advertising clients surged 70% year-over-year in the first quarter. For the full year 2026, management is targeting advertising revenue of around $3 billion, which would represent a doubling from the prior year.

The financials back up the narrative. First-quarter revenue climbed 16% to $12.25 billion, while operating profit rose to nearly $4 billion. A one-time gain related to Paramount provided an additional boost to free cash flow.

Market Skepticism Persists

Despite the strong quarterly performance, the stock has struggled. Shares were trading at around $92 in late April, well below the all-time high of nearly $134 reached in the summer of 2025. The culprit is a softer-than-expected outlook for the current quarter. Netflix guided for revenue of $12.5 billion, narrowly missing analyst estimates, while earnings per share of $0.78 also fell short of expectations.

Technical indicators point to near-term selling pressure, with immediate support seen at $90.75. Citic Securities recently raised its price target from $95 to $107 but maintained a “Hold” rating. The broader analyst consensus is a “Moderate Buy,” with an average price target of $114.82—still well above current levels.

The second half of 2026 will be a proving ground. If Netflix can demonstrate that its selective sports strategy and expanding ad business can sustain margin growth, the path back toward analyst targets becomes clearer. Another miss on quarterly forecasts, however, could cement the stock’s distance from its record high.