Netflix stock is trading lower today despite reporting better-than-expected Q2 earnings and raising its annual guidance. The stock’s rich valuation leave little on the table in terms of upside potential.

In its second-quarter earnings report, the streaming giant disclosed operating income of $3.8 billion and a margin of 34.1 percent, up double digits from a year ago.

Second-quarter revenues at Netflix hit $11.1 billion, an increase of 16 percent on the year-ago period, delivering a net profit of $3.1 billion.

Netflix (NASDAQ: NFLX) stock dropped 4.5% in early trading as of 9:40 a.m. ET, despite beating on earnings last night. Heading into the report, analysts forecast Netflix would earn $7.06 per share on just over $11 billion in revenue. In fact, Netflix earned $7.19 per share on just under $11. 1 billion, thus beating on both top and bottom lines.

Netflix kicks off the second-quarter cycle of media and tech earnings reports on Thursday with its after-market disclosure that is expected to deliver a solid if not spectacular quarter. The forecast for Netflix is the top story in today’s episode of “Daily Variety,

Netflix expects revenue growth of 17 per cent, driven by growth in members, pricing and advertising revenue, it said in a letter to shareholders. While it no