Netflix Ad-Tier Growth Accelerates: Is the Stock Finally Breaking Out?

Netflix's NFLX advertising business continues to accelerate with significant momentum heading into 2026, positioning the company's ad-supported tier as a major growth driver. The streaming platform reached 190 million monthly active viewers globally as of November 2025, representing a substantial expansion from 94 million monthly active users reported in May 2024. This growth reflects Netflix's strategic shift toward a new measurement methodology that multiplies ad viewers by estimated household size, providing a more comprehensive view of advertising reach.

Third-quarter 2025 results demonstrated strong advertising traction, with revenues climbing 17.2% year over year to $11.51 billion. Netflix reported its strongest advertising quarter to date and confirmed plans to double ad revenues in 2025.

The company has expanded its advertising infrastructure through programmatic partnerships with Amazon, Google Display & Video 360, The Trade Desk, and Yahoo DSP. Netflix announced plans to test interactive video advertisements in the United States and Canada, with global rollout scheduled for second-quarter 2026. Advanced targeting capabilities launching in 2026 will enable advertisers to reach audiences by education level, marital status, household income, and high-propensity viewers for categories, including luxury vehicles and travel packages.

Dynamic ad insertion technology is being tested with WWE programming and will expand across Netflix's NFL Christmas Day games and additional live titles throughout 2026, creating new revenue opportunities within the platform's growing live content portfolio.

Competitive Landscape in Ad-Supported Streaming

Disney DIS and Amazon AMZN are pursuing distinct advertising strategies in streaming. Disney reported that its combined Disney+ and Hulu platform reached 196 million subscriptions in fourth-quarter fiscal 2025, adding 12.4 million subscribers sequentially, with domestic advertising revenues increasing 8% year over year. Amazon's advertising services generated $17.7 billion in third-quarter 2025, up 24% year over year, driven by Prime Video's ad-supported audience of 130 million monthly viewers in the United States alone. Amazon exceeded internal expectations for upfront advertising commitments tied to live sports programming, including Thursday Night Football and NBA coverage. Disney continues integrating advertising across its streaming properties while Amazon leverages its demand-side platform to sell inventory across multiple streaming services, including Netflix and Disney+, creating cross-platform advertising opportunities.

NFLX’s Price Performance, Valuation & Estimates

Shares of Netflix have plunged 28.3% in the past six-month period compared with the Zacks Broadcast Radio and Television industry’s decline of 13.8%.

NFLX’s 6-Month Price Performance

From a valuation standpoint, Netflix appears overvalued, trading at a forward 12-month price-to-sales ratio of 7.47X compared with the broader Zacks Broadcast Radio and Television industry's forward sales multiple of 4.3X. NFLX carries a Value Score of D.

NFLX’s Valuation

The Zacks Consensus Estimate for NFLX’s 2025 earnings is pegged at $2.53 per share, unchanged over the past 30 days. This indicates a 27.78% increase from the previous year.

Netflix, Inc. Price and Consensus

Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote

NFLX stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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