Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Despite growing concerns about a potential stock market bubble and mounting economic headwinds, two companies, Deckers Outdoor and Netflix, are presenting compelling investment cases, according to an analysis published on October 29, 2025. Deckers Outdoor, owner of the Hoka and Ugg brands, has seen its stock plummet by 60% from its January peak, largely due to weak full-year guidance and the impact of tariffs. Meanwhile, streaming giant Netflix is demonstrating robust global growth and strategic diversification, appearing resilient amidst broader market volatility.
Deckers Outdoor Faces Tariff Headwinds
Deckers Outdoor (NYSE: DECK) experienced a double-digit stock decline following its second-quarter earnings report, driven by disappointing full-year guidance. The footwear and apparel company, which holds the Hoka and Ugg brands, has seen its stock fall 60% from its peak in January, with analysts attributing the drop to a combination of a stretched valuation, pressure from President Trump’s tariffs, and weak consumer discretionary spending.
For the second quarter, Deckers reported a 9.1% increase in overall revenue, reaching $1.43 billion, largely meeting analyst estimates. Gross margin remained strong at 62%, with Hoka and Ugg brands showing 11% and 10% growth, respectively. Earnings per share rose from $1.59 to $1.82, surpassing consensus estimates.
However, the company’s U.S. business recorded a 1.7% revenue decrease to $839.5 million, while its international segment grew significantly by 29.3% to $591.3 million. Management cut its full-year revenue guidance to $5.35 billion, indicating a 7.2% growth, and projected full-year EPS of $6.30 to $6.39, which is slightly below estimates and implies flat growth for the year.
Management anticipates tariffs will cost $150 million this year, representing approximately 3% of total revenue, though steps are being taken to mitigate this impact. Despite these short-term challenges, the stock currently trades at a forward price-to-earnings ratio of 14, roughly half that of the S&P 500, suggesting a potentially undervalued position as macroeconomic conditions improve and tariff effects subside.
Netflix Expands Beyond Core Streaming
Netflix (NASDAQ: NFLX) is positioned as an “entertainment utility” with over 300 million global subscribers, demonstrating consistent growth despite market fluctuations. The streaming giant’s advertising tier has proven effective, establishing a new revenue stream and offering cost-conscious customers an alternative.
The company’s stock is currently near a six-month low, down nearly 20% from its recent peak, following a one-time expense that impacted its latest earnings report. It trades at a price-to-earnings ratio of 34 based on 2026 expected earnings.
A significant growth driver for Netflix is the success of its title KPop Demon Hunters, which could facilitate the expansion of its business beyond traditional video entertainment. The company has partnered with Hasbro and Mattel for branded toys, with potential for future live entertainment ventures.
This strategic move aligns with Netflix’s long-held ambitions to develop a business model akin to Walt Disney. Its global diversification also provides resilience against U.S. macroeconomic instability, contributing to steady growth observed since a post-pandemic adjustment period that included the introduction of the advertising tier.
Market Outlook
While the broader stock market grapples with high valuations and economic uncertainties, both Deckers Outdoor and Netflix present distinct investment narratives. Deckers offers a value proposition post-sell-off, banking on the fading impact of tariffs and sustained brand strength. Netflix, conversely, continues its global expansion and diversification, reinforcing its position as a resilient entertainment powerhouse.
