Goldman Sachs reiterates Netflix Buy rating as ad pre-sales strengthen confidence in growth and monetization

Overview

This is a Goldman Sachs company research report on Netflix’s 2026 ad pre-sale event. The core of the report is not a forecast revision, but rather a validation of the progress in Netflix’s advertising business, live content, programmatic advertising, and user engagement through the pre-sale event, management Q&A, and advertiser discussions, and on that basis it reiterates its Buy rating on NFLX.

Core views

Goldman believes Netflix’s investment case continues to revolve around three themes: first, user growth, subscription price increases, and expansion of the ad tier support long-term revenue CAGR; second, operating leverage still has room to improve while the company maintains industry-leading content investment; and third, the company’s recently announced $25 billion share repurchase authorization has raised the level of capital returns. The ad pre-sale event strengthened Goldman’s confidence in these themes, especially the progress of the in-house ad tech platform, international expansion, programmatic advertising, the live viewing experience, and personalized ad load.

Analysis framework

The report analyzes company disclosures from the Upfront ad pre-sale event, Q&A with Netflix management, advertiser interactions, GS Forecast financial estimates, GS Factor Profile, scenario valuation tables, and risk disclosures. The valuation uses a two-part equal-weight approach: first, applying 25.0x EV/GAAP EBITDA to the NTM+1 estimate; second, constructing a modified DCF using a 125.0x EV/FCF-SBC multiple and discounting back three years at a 12% discount rate.

Methodology notes

• Valuation methodsEV/GAAP EBITDA and modified DCF blend

  Equal-weight valuation framework

  The $120 target price is based on an equal-weight blend of EV/GAAP EBITDA and a modified DCF, reflecting both earnings multiple valuation and forward free cash flow valuation.

• factor_analysisGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factor ranking

  Goldman evaluates Netflix using percentile rankings versus its Americas coverage universe and Americas internet peers. The charts show that Netflix ranks highly on financial returns, valuation multiples are also elevated, and the composite ranking is stronger relative to the broader coverage set.

• scenario_analysisDownside/Base/Upside valuation cases

  Downside, base, and upside scenarios

  The scenario valuation implies values of $78, $120, and $140 per share, corresponding to return ranges of approximately -20%, +23%, and +44%, with key drivers including EBITDA, FCF-SBC, valuation multiples, and the discount rate.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Netflix Inc. (NFLX.US)

  Core coverage name; the report reiterates a Buy rating

  Strengths

  Large global ad-supported monthly active audience, strong content slate, live content that expands ad inventory, scaling ad tech platform and programmatic capabilities, and a high ranking on financial return factors.

  Weaknesses

  Valuation multiples are elevated, the advertising business is still in an expansion and execution phase, and some new formats such as vertical video feeds are still at an early stage of their lifecycle.

  Comparison

  Compared with Americas internet peers, Netflix ranks more strongly on financial returns; compared with the broader Americas coverage universe, its growth and composite factor performance are more prominent.

  Risks

  Subscriber growth falling short of expectations, churn from price increases, slower-than-expected execution of the ad-supported tier, M&A and integration risk, and intensifying industry competition.

Key data

• Ad-supported monthly active viewersover 250 millionThe company disclosed that global MAVs exceeded 250 million.
• Share of new sign-ups choosing the ad planover 60%More than 60% of new sign-ups chose the ad plan.
• Weekly login rate among ad membersover 80%The company said more than 80% of ad members log in weekly.
• Netflix Ad Suite expansion15 new countries in 2027The platform continues to expand beyond the initial 12 launch countries, with examples including Sweden, Colombia, Thailand, and New Zealand.
• Target price$120Goldman left its 12-month target price unchanged.
• RatingBuyGoldman reiterates its Buy rating.
• 2026E revenue$51.664bnGS Forecast shows 2026E revenue of $51.664 billion.
• 2028E revenue$65.816bnForecast revenue rises from $45.183 billion in 2025 to $65.816 billion in 2028E.
• 2028E EBIT margin35.9%The growth and margin table shows EBIT margin is expected to improve year by year.
• 2028E free cash flow$17.679bnCash flow projections show free cash flow rising from $9.461 billion in 2025 to $17.679 billion in 2028E.
• Share repurchase authorization$25bnThe report mentions the company’s recently announced new $25 billion share repurchase authorization.

Impact & implications

The investment implication of the report is that Netflix’s advertising business is no longer just an early optionality story, but is increasingly forming a clearer medium- to long-term revenue tailwind through user scale, international ad tech expansion, programmatic buying, live content, and personalized ad experiences. If ad monetization, subscription pricing, user growth, and margin expansion all progress together, NFLX could continue to command a growth and return premium versus peers. However, the current valuation multiple is already high, leaving limited room for error if growth delivery or ad execution falls short.

Risks

• Subscriber growth below Goldman’s forecast.
• The timing and magnitude of price increases could raise churn and lower operating forecasts.
• Slower-than-expected progress in the ad-supported tier.
• M&A-related risks, including integration, execution, and regulatory risk.
• Intensifying competition could affect user growth, original content competition, and consumer attention.
• A high valuation multiple means downside risk could be amplified if growth or margin delivery falls short.

What to watch

• Whether ad-supported monthly active viewers and weekly activity among ad members continue to improve.
• The rollout pace of Netflix Ad Suite in new countries and advertiser adoption.
• Commercialization progress for Pause Ads, Live dynamic ad insertion, and Amazon/Yahoo programmatic audience targeting.
• The extent to which live sports and the content slate lift ad inventory, user engagement, and ad revenue.
• Whether new ad formats such as vertical video feeds and video podcasts can achieve meaningful monetization.
• The balance between ad impression growth and the personalized experience, especially whether Netflix avoids simply raising ad load.
• Revenue growth, EBIT margin, free cash flow, and share repurchase execution.