Netflix investors have had little to celebrate in recent weeks as the streaming giant's stock continues to slide. Shares fell 14% in September, according to S&P Global Market Intelligence, extending a broader decline that has taken the stock down about 18% over the past month and 25% this year. The stock is now heading for a fifth consecutive week of losses as investors grapple with slowing engagement, a softer content slate and intensifying competition for consumers' attention.
The concerns received an unusual boost from Netflix itself on Thursday, when co-CEO Ted Sarandos acknowledged that the company's growth has not been fast enough. "Overall, we're not growing as fast as I want us to," Sarandos said at Bloomberg's 2026 Screentime event in Los Angeles. "We are, though, also doing things that create a lot of headwind to that number," he added. Netflix's viewership increased only 2% during the first half of 2026, according to Sarandos.
Live programming offers a potential growth lever
Sarandos pointed to live programming as one area where Netflix could potentially accelerate growth. The company, however, has yet to generate viewing returns from live content that match its spending. Netflix allocates about 5% of its roughly $20 billion annual content budget to live programming, while live shows account for only about 1% of viewing. The strategy nevertheless gives Netflix another avenue to attract audiences beyond its traditional scripted and unscripted programming. The company is also expanding into gaming, documentaries, sports and shorter-form content as it seeks to increase engagement across its platform. Those initiatives are being closely watched because the core streaming business is becoming increasingly mature in some of Netflix's biggest markets.
Wells Fargo warns of weaker engagement
A series of analyst downgrades has compounded the pressure on Netflix shares. Earlier this month, Wells Fargo downgraded Netflix to Underweight from Equal Weight and reduced its price target to $57 from $80. The new target represented about 16% downside from Netflix's Thursday closing price. Analyst Steven Cahall and his team said Netflix viewership fell 8% year over year during the first half of 2026, while hours viewed for its Top 100 Originals declined 3%. The analysts expect a more than 20% year-over-year decline in viewership for Netflix's Top 100 Originals during the second half.
Wells Fargo said Netflix appeared to be broadening engagement by taking content more directly to YouTube while also investing in gaming, documentaries and sports. But the brokerage warned about a shift in Netflix's content mix and the possibility of "missing the water cooler originals." The firm also expects Netflix's second-half content slate to pressure margins, forecasting operating margins of 32.6% in 2027 and 34.2% in 2028, below its previous expectations. Wells Fargo said Netflix could face a "content spend reboot" and described the potential outcome as a "messier NFLX story."
YouTube becomes a bigger competitive threat
HSBC also downgraded Netflix later in September, cutting its rating to Hold from Buy and lowering its price target to $76 from $96. The brokerage cited increasing competition from Alphabet's YouTube and concerns about near-term viewer engagement. YouTube's growing presence on television screens is particularly important because Netflix is competing not simply against other streaming services, but against virtually every form of entertainment competing for time in the living room. According to HSBC, YouTube captured a record 14.2% share of US television viewing in July, while Netflix's share fell to 7.8%, its lowest level in several years.
HSBC believes YouTube's momentum is increasingly coming at Netflix's expense as the Google-owned platform expands its presence on television. The shift also highlights the changing nature of Netflix's competitive landscape. YouTube combines long-form videos, short-form content, creator programming and an enormous advertising ecosystem, giving it multiple ways to attract and retain viewers.
Bulls point to international growth
Not all analysts believe Netflix's recent decline represents a deterioration in its long-term story. Evercore ISI raised its price target to $110 from $100 and reiterated its Outperform rating, citing improving subscriber trends in the US and Japan along with opportunities in live events, short-form content and advertising. Evercore analyst Kutgun Maral said Netflix's penetration rate reached a multi-year high of 63% in the US. In Japan, penetration reached a record 22%, according to the brokerage's surveys. Churn intentions also improved in both markets, although customer satisfaction remained a concern in the US.
The findings came from Evercore ISI's 58th quarterly US subscriber survey and its semi-annual Japan survey. The brokerage said the results reinforced its view that Netflix continues to have meaningful subscriber engagement and pricing power. Deutsche Bank has also turned more positive on the stock, upgrading Netflix to Buy from Hold, although it lowered its price target to $95 from $100. The firm reduced its operating income and free cash flow estimates after Netflix's second-quarter results but argued that investors may be focusing too heavily on US viewing trends while overlooking the company's international opportunity. Analyst Bryan Kraft noted that international engagement has increased year over year in each of the past four six-month periods. Kraft believes Netflix's global scale, brand and production capabilities could drive long-term growth.
This article is for informational purposes only and does not constitute financial advice.
