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

Core Insights - Netflix's advertising business is experiencing significant growth, with a projected acceleration leading into 2026, making its ad-supported tier a key growth driver [1] - The platform has reached 190 million monthly active viewers globally as of November 2025, a substantial increase from 94 million in May 2024, due to a new measurement methodology [1][8] - Third-quarter 2025 results show a 17.2% year-over-year revenue increase to $11.51 billion, marking Netflix's strongest advertising quarter to date [2] Advertising Infrastructure and Innovations - The company has enhanced its advertising infrastructure through partnerships with Amazon, Google Display & Video 360, The Trade Desk, and Yahoo DSP [3] - Plans to test interactive video advertisements in the U.S. and Canada are set for a global rollout in Q2 2026, with advanced targeting capabilities launching in 2026 [3] - Dynamic ad insertion technology is being tested with WWE programming and will expand to Netflix's NFL Christmas Day games and other live titles in 2026 [4] Competitive Landscape - Disney and Amazon are pursuing different advertising strategies, with Disney+ and Hulu reaching 196 million subscriptions and Amazon's advertising services generating $17.7 billion in Q3 2025 [5] - Amazon's ad-supported audience on Prime Video is 130 million monthly viewers in the U.S., exceeding expectations for live sports programming [5] - Disney is integrating advertising across its platforms while Amazon is leveraging its demand-side platform for cross-platform advertising opportunities [5] Valuation and Stock Performance - Netflix shares have declined 28.3% over the past six months, compared to a 13.8% decline in the Zacks Broadcast Radio and Television industry [6] - The Zacks Consensus Estimate for Netflix's 2025 earnings is $2.53 per share, indicating a 27.78% increase from the previous year [11] - Netflix appears overvalued with a forward price-to-sales ratio of 7.47X compared to the industry's 4.3X, carrying a Value Score of D [12]