What Could Surprise Netflix Stock Investors On The Upside? Trefis Team Fri, November 13, 2026 at 7:12 AM EST 3 min read NFLX +0.46% ^GSPC -0.35% DIS -0.12% AMZN +1.15% CMCSA +0.68% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
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Netflix (NFLX) stock lost 44.8% over the past year, while the S&P 500 returned 12.2%. The business itself kept growing, however, with one newer part expanding far faster than the rest. Management also says that part still brings in less than it could. So which part of Netflix is it, and is it working yet?
Management Says Ads Are Growing Over 80% In 2026
That part is advertising, tied to the subscription plan that shows ads. During the October 20, 2026 call, management said Netflix is still growing its ads business over 80% in 2026. By comparison, reported revenue for the whole company grew 11.8% in fiscal Q3 2026 from a year earlier.
The remaining room to grow comes down to what each member pays. Management said members on the ad tier still bring in less revenue per member than those on the standard plan without ads, but that gap is narrowing. Management said the gap means under-realized revenue growth in the near term: money Netflix could collect as the two plans draw closer. Meanwhile, Netflix is preparing its first expansion of ads countries since it launched the plan.
How Big Is Netflix's Whole Business?
Netflix's ads business operates within a broader company that brought in $49.7 billion of revenue over the twelve months ended September 30, 2026, up 14.7% from the twelve months before. In markets where Netflix is more deeply penetrated, management said revenue growth will skew toward advertising and revenue per member. Newer markets such as India, Indonesia and Colombia, however, still have plenty of room to add members.
The share price also looks low next to Netflix's reported earnings. Netflix trades at 17.6 times its earnings over the past twelve months, against 21.9 times for the S&P 500. At the end of September, its price-to-earnings ratio of 19.5 was lower than at every quarter end since the end of 2016 except one. Both comparisons use reported earnings, which can include income outside the core business, so they are a rough guide rather than proof the stock is cheap.
What Has To Go Right For Netflix's Ads?
The ads business still needs to catch up with its own plan, and so far it has not. On the October 20 call, management said Netflix is currently a bit behind its aggressive target for the year, with delays in the rollout and partner integrations for some new ads products. With that report, Netflix cut its 2026 revenue and free cash flow outlook on lower ad revenue expectations.
On the same call, management said it plans to deliver its updated full-year guidance and that its financial objectives are unchanged: double-digit revenue growth, wider margins and more free cash flow. Netflix will give its 2027 guidance, including its margin guidance, with its report expected in January 2027. Netflix's ads growth and its 2027 guidance in that January report are the figures to watch.
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