Netflix’s Undervalued Upside: Why the $1,200 Target is Just the Beginning

Netflix (NFLX) has long been a bellwether of the streaming era, yet its stock remains a battleground for bulls and bears alike. Despite recent volatility, the company is poised to deliver outsized returns thanks to subscriber resilience, a booming ad-supported tier, and a content strategy that rivals can’t match. Let’s dissect why Oppenheimer’s $1,200 price target isn’t just achievable—it’s conservative.

The Ad-Supported Tier: A Growth Engine Ignited

Netflix’s ad-supported plan, priced at $7.99/month, has become a juggernaut. As of May 2025, it boasts 94 million monthly active users (MAUs), a staggering 35% surge from just 70 million in November 2024. This growth isn’t just incremental—it’s a seismic shift in consumer behavior. Over 55% of new sign-ups in ad-supported markets now opt for this tier, hitting 69% in the UK.

The ad model’s success isn’t just about volume. Subscribers spend 41 hours/month on Netflix—higher than any U.S. broadcast or cable network for the 18–34 demographic. This engagement fuels ad revenue, which is on track to double by 2025, driven by Netflix’s in-house Ads Suite. By June 2025, this platform—already live in the U.S. and Canada—will expand to all 12 ad-supported markets, offering advertisers hyper-targeted options across 100+ interests.

Content Dominance: The Unshakable Moat

While competitors like Disney+ and HBO Max splutter, Netflix’s content machine remains unmatched. Its library of exclusive hits—from Stranger Things to The Crown—fuels global loyalty. Analysts at Oppenheimer note that Netflix’s 16.7% operating margin and Piotroski Financial Health Score of 9/9 underscore its financial discipline. A $3.5 billion share buyback program and cost-cutting in original productions (down 15%) have further strengthened its balance sheet.

Critics, including JPMorgan, argue that Netflix’s reliance on international markets exposes it to macroeconomic headwinds. Yet, the data tells a different story. In Q1 2025, Netflix added 8.8 million subscribers, with growth surging in Asia-Pacific and Latin America. Its hybrid subscription+ad model adapts to local price sensitivities, ensuring no one is left behind.

AI-Driven Monetization: The Next Frontier

Netflix isn’t resting on its laurels. By late 2026, it will roll out AI-powered interactive ads, using generative AI to tailor commercials to specific shows. Imagine a horror movie ad that morphs into a spine-chilling promo for a new thriller—a level of personalization that rivals can’t match. This innovation could supercharge ad revenue, positioning Netflix as the 100x AI stock of the streaming era.

Why the Bulls Have the Edge

With shares at $1,187 as of May 20, Oppenheimer’s $1,200 price target is within reach by year-end. But the real prize lies beyond 2025. The firm’s 30x multiple on 2027 EPS (or 20x on 2030 EPS) implies a $2,910 price tag by 2029, a 145% upside from today. Even skeptics must acknowledge Netflix’s $1,355 average annualized price for 2025, backed by a 92% bullish sentiment score.

Final Verdict: Buy Now, Reap Later

Netflix isn’t just surviving—it’s evolving. Its ad tier, content dominance, and AI-fueled innovation form a trifecta of growth. While macro risks linger, Netflix’s $2,740 target by 2030 and 130.9% ROI potential make it a buy for the long haul. Ignore the noise. This is a decade-defining opportunity to own the future of entertainment.

Act now before the crowd catches up.