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Netflix Stock Plummets on Wells Fargo Downgrade
18 Sep
Summary
- Wells Fargo downgraded Netflix to Underweight, cutting price target to $57.
- Declining viewership and a weaker content slate are cited as concerns.
- Netflix stock is down 37.65% over the past year.
Wells Fargo has downgraded Netflix (NASDAQ:NFLX) from Equal Weight to Underweight, significantly reducing its price target to $57 from $80. This revised outlook stems from concerns regarding a projected 4% year-over-year decline in Netflix viewership during the latter half of 2026. The firm specifically anticipates a more than 20% drop in hours for Top 100 Netflix Originals.
Analysts estimate that total viewing hours for the second half of 2026 will be approximately 96 billion. This projection, coupled with an analysis of over 150 key titles, suggests a weaker content slate compared to previous periods. Consequently, Wells Fargo has lowered its operating income margin estimates for 2027 and 2028, and also cut its earnings per share projections for those years.
Despite the downgrade, data from InvestingPro indicates that Netflix may be undervalued, noting a current P/E ratio of 23.78 and a PEG ratio of 0.65. In other recent developments, Netflix has implemented price increases in Germany and Austria and forged an e-commerce partnership with Shopee in Southeast Asia, covering Indonesia, Thailand, and the Philippines.
Other analysts remain more optimistic; Evercore ISI raised its price target to $110, while BMO Capital reiterated an Outperform rating with a $135 price target, emphasizing advertising growth. The negative catalyst identified by Wells Fargo is the viewership report expected in January 2027.
