Netflix (NFLX) Stock: Wedbush Forecasts Ad Revenue to Double in 2026

TLDR

• Netflix (NFLX) stock dropped 22.66% over three months despite beating Q4 earnings expectations, with shares down 7.9% in the past month.
• Wedbush Securities maintains an “Outperform” rating with a $115 price target, arguing the selloff reflects inflated expectations rather than weak fundamentals.
• Q4 revenue rose 17.6% to $12.05 billion while EPS climbed 30.2% to $0.56, both beating analyst estimates.
• Wedbush expects Netflix ad revenue to double from $1.5 billion to $3 billion in 2026, with further growth potential through 2027.
• Phillip Securities upgraded Netflix from “Sell” to “Accumulate” with a $100 price target, citing clear leadership in streaming and strong pricing power.

Netflix shares have taken a beating lately, falling 22.66% over the past three months. Even after the company beat earnings expectations in Q4, the stock kept sliding in pre-market trading.

Netflix, Inc., NFLX

The main worry? Management’s expense outlook. Netflix guided for faster expense growth this year compared to last year. That’s making investors nervous about near-term profitability.

But Wedbush Securities sees things differently. The financial services firm argues that investors have set the bar impossibly high for Netflix. They’ve gotten used to near-perfect execution every quarter. So when results are merely good instead of spectacular, the market treats it as a disappointment.

The Q4 numbers tell a different story. Revenue jumped 17.6% year-over-year to $12.05 billion, beating the $11.97 billion forecast. Operating income rose 30.1% to roughly $3 billion. Net income climbed 29.4% to $2.4 billion. EPS increased 30.2% to $0.56, topping estimates of $0.55.

The Advertising Play

Here’s where things get interesting. Netflix pulled in more than $1.5 billion in ad revenue during 2025. That’s over 2.5 times what they made the year before.

Wedbush expects this number to at least double to $3 billion in 2026. The firm sees additional growth extending into 2027 and beyond. If Netflix closes its pending Warner Bros. Discovery deal, that could add even more fuel to the fire.

Management already confirmed they expect advertising revenue to roughly double from 2025 levels. The ad-supported tier is turning into a real growth engine for the business.

Netflix generated $1.9 billion in non-GAAP free cash flow in Q4, up 35.8% from last year. Users watched 96 billion hours of content in the second half of 2025, a 2% increase year-over-year.

What Analysts Think

Phillip Securities just upgraded Netflix from “Sell” to “Accumulate.” They raised their price target to $100. The firm pointed to Netflix’s clear leadership in streaming and strong pricing power as reasons for the change.

Phillip Securities acknowledged potential volatility around the Warner Bros. deal. But they believe Netflix’s structural and financial positioning remains solid for long-term growth.

Wall Street assigns Netflix a “Moderate Buy” consensus rating. Out of 44 analysts, 25 rate it a “Strong Buy,” three say “Moderate Buy,” 14 recommend “Hold,” and two maintain “Strong Sell.”

The average analyst price target sits at $115.43, implying 34% upside from current levels. The high-end target of $150 suggests potential gains of nearly 74.2%.

Netflix currently trades at 26.62 times forward adjusted earnings. That’s a premium to industry peers. But compared to its own five-year average, the valuation sits at a discount.

The company maintains a base of approximately 325 million paid subscribers across more than 190 countries. With a market cap near $364.9 billion, it remains the dominant player in streaming.

Netflix forecasts 2026 revenue between $50.7 billion and $51.7 billion, representing 12% to 14% growth. Analysts expect Q1 fiscal 2026 EPS to rise 15.2% to $0.76. Full-year fiscal 2026 earnings are estimated to grow 23.72% to $3.13 per share. Fiscal 2027 EPS is projected to increase 20.45% to $3.77.

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