TLDR:
- Netflix stock has climbed 25% since early April, while S&P 500 gained just 4.1% in the same period
- The streaming company is nearing the $500 billion market cap milestone, with shares at $1,173.25
- Ad-supported tier now boasts 94 million monthly active users, jumping from 70 million in November
- Wall Street maintains a Strong Buy consensus with price targets reaching $1,230
- Despite trading at 43 times future earnings, Netflix’s growth trajectory may warrant the premium price
Netflix is making waves in the market this year, defying the general downturn that has plagued many stocks throughout 2025. The streaming titan has seen its shares surge by an impressive 25% since April 2, when President Trump announced tariff plans that sent most stocks tumbling.
Now, Netflix stands at the doorstep of a major milestone. The company is less than $1 billion away from hitting a $500 billion market cap.
What’s behind this remarkable performance? For one, Netflix has proven itself virtually tariff-proof.
Unlike companies that import physical goods, Netflix deals in content. This makes it largely immune to trade tensions.
When Trump threatened 100% import duties on foreign films, Netflix shares barely flinched, dropping just 2%.
The company has options to counter any potential impacts. It could shift production to American soil or adjust its subscription pricing structure.
This isn’t the first time Netflix has thrived during economic uncertainty. The stock was a standout performer during COVID lockdowns when viewers binged hits like Tiger King.
Ad Revenue Driving New Growth
The numbers for Netflix’s advertising business are turning heads on Wall Street. Recent data shows the ad-supported subscription tier now reaches 94 million monthly active users.
This marks a dramatic increase from the 70 million reported in November and more than doubles the 40 million users tallied in May 2024.
Priced at just $7.99, the ad-supported option offers a budget-friendly alternative to the $17.99 entry-level ad-free plan.
Users of the ad tier are highly engaged, spending an average of 41 hours per month watching content.
The company’s advertising chief, Amy Reinhard, recently announced that ad-supported tiers brought in 24 million new users in just six months.
Netflix plans to expand its advertising technology suite to the EMEA region next week. The company also has AI-powered ad formats slated for launch in 2026.
These moves have caught the attention of top analysts. Evercore’s Mark Mahaney maintains a Buy rating and a $1,150 price target after Netflix’s annual Upfront Presentation.
BMO Capital’s Brian Pitz sees the ad business creating “a positive monetization setup” for late 2025 and beyond, setting a $1,200 price target.
David Joyce of Seaport Research raised his target from $1,060 to $1,230, citing the company’s “great flexibility in an array of ad formats.”
Expanding The Empire
Critics point to Netflix’s valuation as a potential concern. The stock trades at roughly 43 times future earnings, well above the S&P 500’s 21 times and the “Magnificent Seven” tech group’s 27 times average.
Looking at historical trends provides context, however. Netflix has averaged a price-to-earnings ratio of 52 over the past five years.
The company has transformed during this period, evolving from what Baillie Gifford strategist Ben James calls “a loss-making challenger” to “a reliable, profitable compounder.”
James, whose firm holds about $4.5 billion in Netflix stock, believes operating margins could expand from the current 27% to nearly 50% by 2030.
This growth potential stems from Netflix’s “flywheel” business model. More subscribers generate more revenue for content, which attracts even more users.
According to The Wall Street Journal, Netflix executives are targeting a $1 trillion market cap by 2030.
The company isn’t limiting itself to streaming anymore. February saw the launch of Netflix Bites in Las Vegas, a restaurant featuring food inspired by Netflix shows.
Plans are underway for “Netflix Houses,” experiential venues set to open later this year.
Live sports programming represents another frontier for growth. Despite having 301.6 million subscribers globally, Netflix still has substantial room to expand.
The company’s CFO Spencer Neumann has estimated the potential market at 700 million to 1 billion homes worldwide.
Analysts project robust earnings growth: 26% this year, followed by 20% in 2026, and 18% in 2027.
Netflix stock has gained 32% year-to-date. Wall Street’s verdict is clear, with 28 Buy ratings versus just 8 Hold recommendations.
