Netflix (NFLX +0.13%) continues to deliver solid revenue and profit growth, but its stock price fell following the release of its fourth-quarter earnings report last week. The shares trade down almost 38% from their 52-week high.
Nothing has changed Netflix's long-term growth trajectory. The company continues to show the potential for strong earnings growth in the coming years. Advertising growth will play a key role, and the market seems to be underestimating it.
Image source: Netflix.
Netflix delivered a solid 17% year-over-year revenue increase for the fourth quarter, and advertising is contributing more to that total. Management said its ad revenue grew 2.5x in 2025 compared to 2024.
NASDAQ: NFLX
Key Data Points
Stocks follow earnings over time, which makes the recent ad growth meaningful for long-term investors. More ad revenue could increase revenue per member and pad the company's margins. Netflix guided for an operating margin of 31.5% in 2026, up from its trailing 12-month margin of 29.6%.
With the stock down, investors are getting better value. The stock is trading at a forward price-to-earnings multiple of 27. This appears attractive, given analysts' expectations of the company's earnings growing by more than 20% per year over the next four years. Assuming the stock continues to trade at the same valuation, that's enough growth for Netflix investors to double their money in four years.
