New Netflix Price Target After Pricing Plan Announcement

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For the second time in two years, Netflix (NFLX) announced it will raise prices for its streaming plans. While some may be caught off guard by this, those who carefully parsed management’s comments on its Q4 2025 earnings conference call weren't.

What the management team shared was that key revenue drivers this year would be similar to those in 2025, citing “pricing,” which hinted at another price increase, as well as membership growth and a roughly doubling of ad revenue to about $3 billion.

Under the new pricing plan, to be implemented in the coming weeks, Netflix’s Standard with Ads plan will now cost $8.99/month, up $1 from $7.99 previously.

The Standard plan (no ads, viewing on up to two devices simultaneously) is rising by $2, from $17.99/month to $19.99/month.

The Premium plan (no ads, streaming on up to four devices at once, Ultra HD and HDR) is likewise going up $2 — from $24.99/month to $26.99/month.

Guidance from management called for 2026 revenue between $50.7 billion and $51.7 billion, up 12%-14% year over year with targeted operating margins of 31.5% operating margin this year, up from 29.5% in 2025. When we think about that guidance and the higher Netflix U.S. price increases of ~ 11% across the product suite, it suggests that guidance for the oncoming quarters could skew conservative.

Some may question Netflix's decision to make this move now given the current environment. However, more than a few will say Netflix has the pricing power to do so, especially as it moves further into streaming live events and continues to invest in content people want to consume.

Could we see a trade down in the mix of plans to the Netflix Standard with Ads? Odds are there will be some of that, but that also gives Netflix a wider base reach for its higher-margin, advertising efforts.

Netflix already forecasted higher-margin advertising revenue doubling in 2026 to ~$3 billion. With Netflix’s operating margin rising to 29.5% in 2025 when it sold $1.5 billion in advertising revenue, up 2.5x compared to 2024 when its operating margins clocked in at 26.7%, a greater mix shift toward ad sponsored plans wouldn’t be a bad thing at all.

Earlier this week, we added to the Pro Portfolio’s Netflix position, and as Wall Street computes the likely impact and timing for that price hike, we’re likely to see EPS forecasts and price targets move higher. We will look to get ahead of that by increasing our target to $115 from $100. With that in mind, we are reviewing our current Two rating on the shares.

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At the time of publication, TheStreet Pro Portfolio was long NFLX.