Netflix Stock Downgraded Over 'Worrying' Engagement Concerns
Shares of Netflix are down 40% in the past year and 23% in the past six months as Wall Street continues to be concerned about the streamer's engagement metrics.
HSBC and Wells Fargo Downgrade Netflix
On Tuesday, HSBC analyst Mohammed Khallouf downgraded Netflix from a 'Buy' to a 'Hold' rating, cutting his price target from $96 to $76. He attributed this decision to YouTube's growing influence in the living room and Netflix's decreasing share of U.S. TV time, which dropped to 7.8% in July. Khallouf believes that YouTube has benefited from a decline in interest for Netflix's original content and sees little chance of an imminent recovery in engagement.
This downgrade follows Wells Fargo's decision less than a week prior to lower its rating on the stock to 'Underweight' from 'Equal Weight' and reduce its price target from $80 to $57, citing "worrying" engagement trends.
On Friday, Wells Fargo analyst Steve Cahall estimated that Netflix members watched an average of 1.6 hours per day in H1 2026, a decrease of approximately 8% from the same period in 2023.
Competition and Netflix's Response
Netflix faces stiff competition not only from YouTube but also from traditional media giants like Disney and Paramount. In an attempt to boost engagement, Netflix has diversified into podcasts, live events, sports, vertical video, and gaming. They have also been actively recruiting YouTube talent, expanding their content globally through partnerships, and exploring the addition of live channels and bundles with other streaming services.