What Happened?
Shares of streaming video giant Netflix (NASDAQ: NFLX) jumped 2.4% in the afternoon session after reports revealed the company's advertising business is scaling faster than Wall Street had expected, with confidence building ahead of presentation to advertisers on May 14.
Netflix confirmed that its ad revenue is on track to double in 2026 to roughly $3 billion, that ad buys grew 16% year-over-year in Q1, and that the company works with more than 4,000 advertisers, up 70% from a year ago. Some brands using its new in-house Netflix Ads Suite already doubled their spend on the platform. The momentum also benefited from two new product launches: Amazon Audiences targeting and Yahoo DSP deterministic audiences, which significantly upgrade Netflix's ad-targeting capabilities.
After the initial pop the shares cooled down to $87.61, up 2.6% from previous close.
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What Is The Market Telling Us
Netflix’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 25 days ago when the stock dropped 9.1% on the news that the company reported underwhelming first-quarter results with revenue and earnings guidance for the next quarter falling below Wall Street's estimates.
On the other hand, sales came in ahead of expectations during the quarter, and operating profits (adjusted EBITDA) also beat analysts' estimates. Management attributed the quarter's performance to continued growth in paid memberships, strong engagement in Asia-Pacific markets, and the impact of high-profile live events like the World Baseball Classic in Japan.
Looking forward, Netflix's full-year guidance was anchored by plans to double its advertising revenue and continued expansion into new content categories, such as podcasts and regional live sports. Still, management signaled caution on near-term profit margins, citing ongoing investment requirements and the partial acceleration of M&A-related costs from the Warner Brothers deal. These investments likely weighed on near-term guidance.
Netflix is down 3.7% since the beginning of the year, and at $87.61 per share, it is trading 34.6% below its 52-week high of $133.91 from June 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Netflix’s shares 5 years ago would now be looking at an investment worth $1,806.
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